The government has set a 2 per cent target for biofuel use by 2010, which would equate to 360 million litres of ethanol in 2010. However, consumers remain sceptical after media reports that high levels of ethanol could cause engine damage and void warranties.

During high level talks with the federal government, oil company executives said they would assist the government in meeting its target on the conditions of increasing acceptance by consumers, security of supply and ethanol would be competitively priced.

Cabinet is expected to reconsider the issue in the next few weeks.