Freedom Fuels now offered E10 at 24 sites in south-east Queensland, while all up more than 90 outlets offered the fuel throughout the state, according to Bligh.

"The proof that E10 is being welcomed by consumers is in the sales," she said.

"It is consumers who are driving the ethanol industry forward."

The state government has provided Freedom Fuels with a $317,000 grant under the Queensland Ethanol Conversion Initiative to help the company convert its outlets to supply E10.

The Initiative itself was being implemented under the $7.3 million Queensland Ethanol Industry Action Plan 2005-2007 and was aimed at increasing demand for ethanol and stimulating expansion of the State's ethanol production industry.

"Ethanol has the potential to be a winning fuel for Queensland,” Bligh said.

"It offers consumers the greener choice they want and it offers our sugar and grain producers an alternative outlet for their produce."

Meanwhile, federal resoruces and indsutry minister Ian MacFarlane has said he was now confident Australia would exceed its biofuels target of 350 million litres by 2010, following a meeting with oil refiners earlier this month.

Caltex, BP and Shell have committed to investing in ethanol, while Mobil was still considering it, according to McFarlane.

But he said it was the independent petrol stations who were leading the pack with ethanol blended petrol.

Macfarlane said ethanol's excise-free status meant that E10 blends should be four cents a litre cheaper than standard petrol and this should drive significant growth in the sector.

The Australian car industry has also now decided to back E10 ethanol-blended petrol.

Carmakers will tell drivers from next year that petrol blended with 10% ethanol, known as E10, is safe for vehicles and will not affect warranties. The message will be placed on every petrol-cap flap from January.

The about-face follows meetings between cabinet ministers and the chief executives of Holden, Ford, Toyota and Mitsubishi.