Australian Wool Innovation (AWI) is to spend more than AUD$120m (US$105m) on reinvigorating the international reputation of Australian Merino wool over the next three years.

AWI, which also unveiled a new corporate identity of a stylised ram's head, said the new drive was designed to portray Australian Merino wool as "the world's best luxury fibre".

The wool has been dogged by controversy in recent years, with animal rights groups condemning the practice of "mulesing", by which strips of wool-bearing skin are removed from the sheep's hindquarters to prevent infestation of fly larvae.

Groups such as PETA argue that the practice is cruel, and many international retailers and apparel companies have banned wool from mulesed lambs.

AWI has agreed to a voluntary phasing out of the practice by 2010.

"We are committed to supporting our hard-working Australian farmers, now the world's largest wool producers," said AWI CEO Craig Welsh.

"AWI is dedicated to the ongoing development of high value-adding services to provide woolgrowers, AWI shareholders, trade, retail and marketing partners with the tools they need to prosper."

The wool will be marketed through B2B campaigns shot by leading Australian fashion photographers, while new licensing programmes for the Australian Merino, Superior Merino and Superior Merino Blend brands will be rolled out globally, beginning now.

In all, Australia has 55,000 woolgrowers, whose sheep produce 400m kg of fleece, worth a total of AUD$2.8bn a year.