A Beijing driver who was fined 100 yuan (US$12.3) for driving his 1.0-litre Xiali on Chang'an Avenue filed a suit against the local traffic management agency because he believes the punishment meted out was unlawful.

The Xicheng People's Court received the lawsuit last week, the first case of its kind since 1998.

But the Traffic Management Branch of Xicheng District argued that the fine was given according to a local regulation that took effect in December 1998.

The regulation stipulates that compact cars with engine capacities 1.0-litre or are not allowed on Chang'an Avenue between 7 AM and 8 PM.

Li Jinsong, the plaintiff's lawyer, said the regulation, which contains implications of discrimination against small cars, is an infringement of citizens' rights and runs counter to the law.

Discrimination against small or compact cars exists across the country. More than 80 cities have policies restricting the purchase and use of this type of economical car for a host of reasons, ranging from their bad image to contribution to traffic jams.

In Shanghai, China's financial hub, automobiles with engines smaller than 1.2 liters are forbidden on overpasses.

Guangzhou, capital of south China's Guangdong Province, has even stopped granting license plates to cars under 1.0 liter.

On Monday, Zhao Yingmin, head of the Department of Science, Technology and Standards under the State Environmental Protection Administration, said that the controversial policies will certainly be phased out.

He encouraged the use and production of high-quality compact cars that are fuel efficient and more environmentally friendly, which supports the central government's call for an energy-saving society.

"What the government encourages are high-quality compact cars with low emission rates and low fuel consumption," Zhao said.

Zhao said car manufacturers should speed up efforts to improve the safety standards, comfort, power and design of such cars to attract more buyers.

Premier Wen Jiabao said at the end of June that all unreasonable limitations on the use of low-engine vehicles should be scrapped.

The nation's new auto industry policy, launched in June by the National Development and Reform Commission, also encourages customers to buy low-emission vehicles.

Zhao said the power of the engine itself cannot indicate the overall performance of a car since cars with small engines and cheaper price tags are not all of low quality.

He said a compact car usually consumes 4-6 liters of fuel every 100 kilometers, but an ordinary sedan with a 1.6 or higher engine needs to guzzle 8-11 liters for the same distance.

"Generally speaking, a compact car leads to a 30-50 percent saving on fuel," Zhao said.

As a growing number of new consumers are price-conscious people who are sensitive to fuel costs, automobile insiders say the compact car is gaining popularity in the world's third largest auto market.