"This is the turning point," Luiz Fernando Krieger Merico, interim president of Brazil's environmental agency IBAMA, told Reuters in an interview.

"There will be a noticeable fall (in deforestation) between 2004 and 2005...this decline will be progressive from now on," Krieger said.

Amazon deforestation reached its second-highest level in 2003 during the first year of Brazilian President Luiz Inacio Lula's presidency. It rose again in 2004, according to preliminary government figures, as loggers and farmers used a jungle highway to push deeper into the rain forest.

Stang, 74, was shot as she set up a federal reserve blocking the advance of loggers into hardwood-rich rain forest in Para state. The government saw her murder as a challenge to its power by Amazon timber mafias and their economic allies.

"They (loggers) are going to have to legalize their operations or be pushed out of the market," said Krieger.

CURB AMAZON DESTRUCTION

Brazil's government wants to curb Amazon destruction and land battles harming its image abroad and turning vast swathes of forest into useless, semi-desert regions.

But Lula does not want to hurt economic growth or stoke violence with outright bans on farming and logging on illegally occupied federal lands -- areas with multiple ownership claims after decades of unauthorized subdivisions and sales.

Lula's solution is a plan to create a new federal presence on the Amazon frontier with 19 bases from which IBAMA, army and police units will legalize forest use and enforce controls.

"What's new is the cooperation between the army, IBAMA and federal agencies is permanent," said Krieger.

"IBAMA often arrives in a helicopter and we're shot at and we flee, but this isn't going to happen anymore with the army," said Krieger of plans for IBAMA units to travel in army helicopters with jungle warfare units.

Lula has frozen new logging and farming in a protection area three times the size of Belgium adjacent to jungle highway BR163 while authorities confirm what activities are legal.

Environmentalists applauded the actions but are waiting to see if the government has the political will to create reserves and enforce the law.