The new production is split between 480,000 tonnes of biodiesel and 320,000 tonnes of ethanol, the farm ministry said in a statement. Projects will be chosen in the spring, it said.

"Today's decision will maintain France's leading position in biofuels over the next three years," the ministry said.

Current French biofuel production stands at 100,000 tonnes of ethanol, derived from sugar beet, wheat or maize, which is then blended with fuel, and almost 500,000 tonnes of biodiesel mainly made from rapeseed.

The ministry said that in 2005, bioethanol production will be doubled by the addition of 100,000 tonnes. For biodiesel, the new approvals will mean another 30,000 tonnes.

The addional output will cost the government around 320 million euros a year in tax rebates, the ministry said.

Because biofuels are more expensive to produce than regular fuels, the government has offered tax rebates for biofuels.

FIRST STEP

French wheat, maize and sugarbeet growers welcomed the news, saying in a joint statement the move was in the right direction although it fell short of their expectations.

The growers had called for half of the total 800,000-tonne biofuel quota be devoted to ethanol.

Biodiesel producers also welcomed the news, saying they could now begin investing in new plants and capacity.

In a bid to reduce carbon dioxide emissions and cut the European Union's dependence on fuel imports, the bloc last year set a target that fuels should contain two percent of biofuels by 2005, a figure rising to 5.75 percent by 2010.

France has already said it would be two years behind the first target but it still hopes to meet the 2010 deadline.

"This is a first step. France will launch a second one after 2007 in order to meet the objective of 5.75 percent by 2010," the ministry said.