Andrew Walker in Washington: 'A practically unanimous consensus' for this course of action

Michel Camdessus, head of the International Monetary Fund, said that the fund is likely to sell some of its gold reserves to reduce the debt burden for poorer countries.

The move is a major step forward for the third world and it will be the first time that gold has ever been sold to cut the debts of the poorest nations.

The move comes amid concerns that without some financial help millions of people could die through malnutrition and poverty in the debt laden countries.

Mr Camdessus, speaking at the IMF's spring meeting in Washington, said that discussions had been based on selling five million or more ounces of gold and then investing the proceeds to help debt relief fund set up by the IMF and its sister organisation the World Bank.

Golden promises

Several industrial countries, including the UK, the United States and Japan, have endorsed the sale of as much as 10 million ounces of IMF gold to shore up the Highly Indebted Poor Countries (HIPC) initiative.

If the IMF was to sell 10 million ounces it could raise nearly $3bn.

Germany, which had been fiercely opposed the plan until a new government took power late last year, also appears to be coming round to the idea.

UK Chancellor Gordon Brown said that there was a growing consensus among the Group of Seven leading industrial nations, which includes Germany, for a gold sale.

"There has been a breakthrough in attitudes. It is now clear that countries have either come out in favour or are willing to consider the idea."

Japan offers help

Japan has offered to cancel the debts of the world's poorest countries.

In a gesture which will add to the momentum to help those countries most burdened by debt, Japan says it will cancel development loans of $7.8bn if other industrialised countries will share the burden.

Japan is the largest lender to developing countries, but it has been reluctant until now to offer a bilateral debt reduction plan.

Woe for world's poor

Mr Camdessus indicated that a decision would be made soon, although the IMF had failed to finalise an agreement at its meeting.

The move by the IMF comes as the state of the world economy improves - pulling back from the brink of the financial crisis that hit Asia and Russia last year.

However the World Bank warned earlier this week that efforts to improve health, education and the living standards of the world's poor are faltering.

In its annual report on the "World Development Indicators", the bank said the gains of many people who had escaped from poverty in recent years could be erased in the aftermath of the Asian economic crisis.