Agriculture Minister Carlos Costa Neves said the government would pay farmers their regular state subsidies for February and March ahead of schedule, on January 27, to help them cover extra costs brought on by the lack of rain.

"Given the fact that we are going through an especially dry winter, which creates difficulties with respect to the feeding of livestock, we will issue these payments earlier," he told reporters after a regular cabinet meeting.

Farmers have complained of the need to buy extra feed for cows and other livestock since the lack of precipitation across most of mainland Portugal has led to a shortage of grass.

The national meteorological office said water moisture levels in the soil were below average in most of the country, especially in the southernmost provinces of Alentejo and Algarve where they hovered around 40 percent of normal levels.

Crops and pasture in those two provinces would likely suffer from the lack of water, it warned in a statement.

The meteorological office forecast sees no chance of rain until at least January 15.

Environment Minister Luis Guedes meanwhile ruled out the possibility of the government rationing water in the worst-affected areas.

"The analysis of the government is that there is no justification to take exceptional measures," he told reporters.

In October Guedes had threatened to ration water in the Algarve, which is home to scores of golf courses, if the province did not receive enough rain by the end of 2004.

The statement was immediately condemned by tourism industry officials who said it would frighten visitors away from the Algarve, the nation's main tourist centre.

Environmentalists estimate Portugal wastes some three billion litres (780,000,000 gallons) of water each year.

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