The bill, unanimously approved by the 290-seat Majlis, stipulates that car owners be provided with "smart cards" that fix a subsidised petrol allowance and force drivers to pay full price when they exceed that ration.

Petrol pumps are to be equipped with the new technology by mid-January, with the new system coming into force three months later.

The law is subject to the approval of the Guardians Council, a 12-member legislative watchdog.

Petrol is cheap in Iran: A litre of regular costs 800 rials (nine US cents, or 34 cents a gallon) and a litre of super costs 1100 rials (12 cents, or 45 cents a gallon).

The head of the parliament's energy commission, Kamal Daneshyar, was quoted in Iranian media as saying that the government had proposed a subsidised fuel allowance of five litres a day for private motorists and 30 litres a day for taxis and public sector vehicles.

Iran is Opec's second-largest
oil exporter (file photo)

The final figures will be worked out later, once the smart card system is installed.

An explosion in car ownership has seen petrol consumption rise to 66 million litres a day, and the Islamic republic's refineries - which produce 40 million litres a day - cannot keep up.

The shortfall is met by imports, for which Iran - Opec's number-two oil exporter - has to pay full price. During Iran's last financial year, which ended in March, an estimated $2.8 billion was spent on imports.

In the current Iranian financial year, that figure is set to increase to $4 billion.

The problem has been worsened by petrol smuggling to those of Iran's neighbours where petrol costs are at the real market value.