The Australian government on Wednesday announced plans to ditch its A$678 million textile, clothing and footwear assistance program in favour of a new scheme for the most successful companies.

Industry minister Ian Macfarlane told textile chiefs during a visit to Melbourne a new support package was needed to reward firms strong enough to survive in the long term without government help.

He warned some companies would not survive as a result of the decision which follows a government study into a troubled industry worth A$9 billion that employs 65,000 people.

The minister said the government is likely to reduce tariffs which prop up troubled firms but said it is still looking at new ideas to help the industry when the current package ends in 2005.

"The bottom line remains that what we're trying to do with the next plan is actually build the industry so it is able to sustain itself, so rather than have a package which is simply a holding pattern, something that just keeps them alive like life support, we want to build the industry to an internationally competitive state," he said.

"We need to ensure that the next plan is well targeted so that it does ensure that we are supporting those sections of the industry that have the potential to be self-sustaining.

"The challenge is to put in place a successor and to get the industry to a point in five to 10 years where it no longer needs assistance."

Last June, Australia's apparel, textile and footwear industry unveiled a new 10-year strategic plan that includes doubling its exports to A$6.5 billion a year and encouraging firms to use offshore manufacturing.

Key points included internationalising supply chains, producing more innovative supply chains that can change quickly to suit consumer preferences, and the creation of more niche brands.

The blueprint was put together by the Textile, Clothing, Footwear & Leather Forum (TCFL) which believes the industry's future lies in a shift away from manufacturing to design, global marketing and product innovation.