Formula One's world governing body is scrapping plans to ban tobacco advertising in 2006.
Many F1 teams are heavily reliant on tobacco money
After taking legal advice, the International Automobile Federation (FIA) said on Wednesday that the ban would be replaced by a "recommendation" that such sponsorship should cease.
The move is likely to heighten tensions between the FIA and the European Union, which is introducing a ban on tobacco advertising in 2005.
Three of Formula One's top four teams - Ferrari, McLaren and Renault - have tobacco sponsors that pay a large chunk of their budgets.
The FIA has been haggling with the EU for 10 years on plans to outlaw tobacco advertising.
And FIA president Max Mosley has said a ban could result in there being only a handful of F1 Grand Prix in Europe in future.
He said F1 teams had contracts to 2006 and an EU ban from 2005 would force teams to limit the number of European Grand Prix they raced in.
Mosley has said there might be only six races in the EU by
The Belgian Grand Prix has been dropped this year and Austria will follow next year.
China and Bahrain are scheduled to come in for 2004 with future
races possible in Turkey and Russia.
India, Egypt, Mexico and another race in the United States are
also being discussed as possible venues.
The FIA has always maintained that an EU ban is a waste of time, because tobacco advertising would be beamed into Europe on television from the races where tobacco advertising is allowed.
The F1 ruling body has threatened to take the EU to a European Court of Justice to prevent them imposing a ban in 2005.