The Australia and New Zealand Food Authority has proposed the regulations should come into effect about a year from now, which would be ahead of labelling regulations due to come into effect from April 2001 in Japan.

``The Australian policy right now is an important experiment to see how this mandate can be put into practice,'' said the technical policy director of the Consumers Union of the United States, Edward Groth.

``It's unclear yet how far it's going to go, what practical problems they'll encounter and how they'll resolve them. It's a first step,'' he told Reuters.

Consumer lobby group, the GenEthics Network, said the Australian and New Zealand regulations were unlikely to go as far as requiring labelling on all refined and processed foods and all restaurant and prepared meals, which is what the network sought.

``The food authority is saying certain refined and processed foods need not be included,'' said GenEthics director Bob Phelps.

The head of the Australia and New Zealand Food Authority declined to reveal the agency's recommendations or the estimated costs for the industry to meet the proposed rules, but he said an independent study showed fulfilling the rules could be expensive.

``But they (independent consultants) certainly provided confirmation that costs are a substantial consideration,'' Australia and New Zealand Food Authority managing director Ian Lindenmayer told Reuters.

He said food companies would need about a year to take the steps needed to identify whether they were using ingredients which had genetically engineered material and said laboratory testing capacity was limited.

Groth and Phelps dismissed industry estimates that food labelling and the costs of segregating gene-modified foods would be enormous.

``The costs will be quite manageable and minimal,'' said Phelps, pointing to the way wheat for pasta and wheat for bread were separated and the way organic foods were certified.

Groth said industry always exaggerated the costs when fighting new environmental regulations. ``When rules are adopted, the costs miraculously go down 99 per cent,'' he said.

Lindenmayer and consumer advocates said labelling was important not so much because gene modified foods posed a health threat but because shoppers wanted the freedom to choose whether to buy foods with gene-modified ingredients.