The government is adopting the new policy from next year as part of a new attempt to rein in population increase and relieve poverty in rural areas, state media reported on Monday.

The annual 600 yuan ($75.95) a year stipend is supposed to lessen the burden on single children who have to look after their aged parents, many of whom in rural areas have no health insurance, the official China Daily newspaper said.

China introduced a one-child policy in 1979 but later relaxed it to allow farmers in particular to have more children, especially if they have a daughter first.

The one-child policy however varies from region to region, and is more rigorously enforced in urban areas. Families having more than one child are often fined or denied benefits given to families which have only one child.

China now has 1.3 billion people, making it the world's most populous nation. The government's one-child policy remains in effect in most urban areas, although some exceptions have been allowed.

Parents prefer sons

Chinese parents traditionally prefer sons, who are seen as being able to carry on the family name and provide for them in old age.

"In the policy's early years local governments' main enforcement measure was to impose fines on rural families that violated the policy," the newspaper said.

"Experts said although imposing fines has contributed to the project's success, the policy should be adapted as the nation develops," it added.

"More encouraging measures and public education should be used to raise awareness of the need for family planning," the report said.

It added that about 95 per cent of survey respondents who had either one son or two daughters reported financial problems.

The survey was carried out by a development body under the State Council, or cabinet, in rural areas of Jiangxi, Gansu and Shanxi provinces.

Another change is to give one-off payments to rural families who have been given permission to have a third child but who choose not to have the child, the report said.