France has proposed that for financial discussions the G8 should be expanded to include the 16 other member-states of the International Monetary Fund.

Speaking before the start of the G8 conference in Birmingham, President Jacques Chirac said such a move would allow a fuller discussion of global economic and financial matters.

Commenting on Japan's financial crisis, President Chirac said he was not convinced that fundamental structural reform of the Japanese economy was required, but called for a greater opening of the country's markets.

Meanwhile, US President Bill Clinton met Japanese Prime Minister, Mr Ryutaro Hashimoto in Birmingham yesterday to discuss Tokyo's latest £89 billion economic package. The two men said they had made "significant progress" on deregulating four market sectors of the Japanese economy.

"This initiative focuses on four principle areas: telecommunications; housing; medical devices and pharmaceuticals; and financial services and distribution," a US spokesman said.

A statement issued by the G7 heads of state and government - the G8 minus Russia - said there were different challenges facing their economies. The US, Canada and Britain had enjoyed continued strong growth but had to be mindful of inflationary threats, Germany, France and Italy were seeing growth gaining momentum and should continue structural reform, and Japan's aid package was to be welcomed along with its government's intention to strengthen its financial system. Today, the G8 leaders will travel to a retreat, away from the press, to discuss the reduction and possible elimination of third world debt. One proposal would see the G8 urge the Club de Paris group of debtor nations to write off 80 per cent of the loans to the poorest 10 countries.

They will also hear more about the possibly disastrous consequences of ignoring the "Millennium Bomb" computer problem.