They cite erosion and landslides on steep hills around the dam, conflicts over land shortages and "ecological deterioration caused by irrational development".

The dam, whose construction flooded 116 towns and hundreds of cultural sites and displaced 1.4 million people, is a work in progress, but state media have said it could be completed by the end of 2008, just after the Beijing Olympic Games.

"More than 4 million people currently living in northeast and southwest Chongqing, where the Three Gorges Reservoir extends for 600 km (360 miles), would be encouraged to resettle on the urban outskirts about an hour's bus ride from downtown Chongqing," Xinhua said, quoting a report on the on sina.com news site.

No details about the relocation were available, but Yu Yuanmu, vice mayor of Chongqing, was quoted by Xinhua as saying the ecological safety of the area was at risk from the growing population.

Environmentalists have long criticised the project, saying silt trapped behind the dam is causing erosion and warning that the dam's reservoir will turn into a cesspool of raw sewage and industrial chemicals backing onto Chongqing.

The State Council had approved a plan which was of "great importance to the environmental protection" of the area, Jiang Yong, director of the Chongqing development plan bureau, was quoted by the China Daily as saying.

"One of the key elements in Chongqing's new development plan is to further our efforts to protect the environment of the reservoir area since the environment here has changed greatly due to the Three Gorges project and massive population relocation."