Although Sarkozy's ruling right holds an absolute majority in the National Assembly, one third of his UMP party rebelled and joined left-wing lawmakers to vote out the text on technical grounds, by a whisker-thin 136 votes to 135.

Cheers broke out outside the parliament building where anti-GM campaigners had gathered in protest as the bill, which aimed to bring France into line with a 2001 European Union law, was rejected.

Anti-globalisation activist Jose Bove, who has been jailed several times for ripping up GM crops, called it a "historic victory".

"This is a collective victory for the citizens of this country who refuse GMOs (genetically-modified organisms). The government will not be able to do anything it wants after this," said a cheering Bove.

Left-wing critics attacked the legislation, drawn up following a national conference on the environment last October, as lacking strong enough safeguards to protect conventional crops from possible contamination from GMOs.

They also attacked its plans to make ripping up GM crops, a tactic of choice for French anti-GM activists, a criminal offence punishable by up to two years in jail.

Opposition among members of Sarkozy's UMP party was for different reasons: many argued the text gave too much ground to environmentalists by making it compulsory to publicly disclose any GM field under cultivation.

Green party deputy Noel Mamere said the National Assembly vote was "a fine lesson for the government and for Nicolas Sarkozy", while Greenpeace said it was "happy" the text had been voted out.

GM crops have proved divisive even in French government ranks, where Environment Minister Jean-Louis Borloo and his junior minister, Nathalie Kosciusko-Morizet, have openly clashed on the issue.

Prime Minister Francois Fillon said the text would be submitted to a new vote in both the lower-house National Assembly and the supper house Senate, and that a bi-partisan committee would meet Wednesday to start studying the text.

But the Socialist opposition warned the government it would not accept the text being forced through parliament.

Reflecting widespread public hostility to GM crops in France, the government in February banned the only strain of genetically-modified corn currently grown in France, MON810, produced by the US agribusiness giant Monsanto.

GM crops cover less than one percent of farmland in France, Europe's top agricultural producer.

While production of GM maize remains small, it has increased: some 22,000 hectares (54,000 acres) of the crop were planted in France in 2007, up from 5,000 hectares in 2006.

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