One aim of the Chinese mission would be to investigate what may be the perfect source of fuel, the Southern Metropolis News reported.

The news follows last month's successful flight by two Chinese astronauts, who orbited Earth for five days in what was only China's second manned space launch.

According to state media, China is now developing new spacecraft up to the Shenzhou X, before developing a permanent space station and eventually progressing to a manned moon mission.

"China will make a manned moon landing at a proper time, around 2017," leading scientist Ouyang Ziyuan was quoted by the Southern Metropolis News as saying.

The project also includes setting up a moon-based astronomical telescope, measuring the thickness of the moon's soil and the amount of helium-3 on the moon -- an element some researchers say is a perfect, non-polluting fuel source. 

Some scientists believe there is enough helium-3 on the moon
to power the world for thousands of years. 

"We will provide the most reliable report on helium-3 to mankind," Ouyang said. 

NASA plans to return to the moon
in 2018

In September the United States unveiled a $104 billion plan to return Americans to the moon by 2018.

Its Apollo programme carried the first humans to the moon in 1969.

China's first lunar orbiter could blast off as early as 2007, coinciding with its third manned space trip in which possibly three men would orbit Earth in Shenzhou VII and conduct a space walk. 

Earlier this week reports in the Beijing News said China was designing a rocket that could carry a payload of 25 tonnes, up from a present limit of eight tonnes, though it would unlikely be ready for another six-and-a-half years.