The right-wing opposition is considering an appeal to the Constitutional Court to keep the 85-year-old principle of nationality by blood.

The bill, which was earlier approved by the centre-left coalition government, was presented to reporters in Bonn by German Interior Minister Otto Schily.

Interior Minister Otto Schily: We would be badly advised if we left these people as second class citizens

He rejected criticism that the proposals would stir racial discontent and lead to a flood of new immigrants.

"This is about the integration of fellow citizens living in Germany and is in the interests of all German citizens. This is not about allowing greater immigration," he said.

Two opposition parties, the Christian Social Union and the Christian Democrats, say the changes would create resentment of foreigners and encourage crime. They say the bill could also make it easier for foreign criminal groups to operate from Germany.

The legislation is expected to go to parliament in the summer.

Millions eligible

More than half of the seven million foreigners living in Germany would become eligible for citizenship under the new law. They would not have to surrender nationality of their country of birth.

Chancellor Schröder pledged to relax strict citizenship laws

At present migrants such as Germany's large Turkish population are denied citizenship, even though many have have lived in Germany for decades.

In contrast, ethnic Germans scattered throughout central and eastern Europe are entitled automatically to passports.

Under the reform, children born in Germany to long-term residents would be offered German nationality automatically, while migrants would be able to seek naturalisation after living in the country for eight years.

Applicants for citizenship would have to undergo the naturalisation interview in German, sign a written pledge to the German constitution and be able to support themselves and dependants without government welfare.