Windsor said the scaled rise would allow the necessary investment, which would occur in country areas, and give the oil companies time to absorb the impact.

He claimed that adding ethanol - produced from grains and sugar cane - to petrol would help with renewable energy, environmental, health and regional development.

Windsor argued that it was time Australia moved with the rest of the world in recognising the importance of ethanol as a clean, renewable fuel. In the US, a new ethanol plant was being built every 23 days, he said.

The Queensland National and Queensland Labor parties also support moves to make adding ethanol to petrol mandatory.

Windsor's move coincides with a visit to Australia by Brazilian agriculture minister Roberto Rodrigues, who has urged Australia to help develop international ethanol markets.

Brazil, a major ethanol producer, yesterday issued a joint statement with Japan on the need for greater non-governmental action promoting the wider use of ethanol in fuels.

As a result of a meeting between Brazilian president Luiz Inacio Lula da Silva and Japanese prime minister Junichiro Koizumi, Japan intends promoting ethanol as a fuel additive to meet Kyoto Protocol emissions targets. It will also enter into negotiations with Brazil to obtain an increased supply.

Brazil, a world leading ethanol user and producer, wants to boost ethanol sales to Japan, which has the world’s second largest gasoline demand after the US. Currently, Japanese petroleum refiners are unwilling to introduce ethanol into their refining process due to higher production and supply costs. Industry bodies have said if the Japanese Government wants to increase ethanol use then cost barriers will need addressing.

According to the joint statement, ethanol fuel tests will be conducted in six Japanese prefectures, with an expectation of positive results.