Obama on Monday ordered the Environmental Protection Agency to reconsider its rejection of an attempt by California to impose new emissions regulations which are significantly more restrictive than federal standards.

Obama also ordered the Transportation Department to produce the guidelines to enforce a 2007 law which requires US cars to reach average fuel efficiency of 35 miles per gallon by 2020.

"Our goal is not to further burden an already struggling industry; it is to help America's automakers prepare for the future," Obama said.

"As we move forward, we will fully take into account the unique challenges facing the American auto industry and the taxpayer dollars that now support it."

California has for years had tougher standards and twelve other states follow its lead.

Automakers began fighting the rejected rules before they were even written and claim they would require a wholesale downsizing of the US automobile fleet.

But on Monday, they greeted Obama's announcement without complaint and said they were ready to work with his administration.

After being vilified in Congress, GM and Chrysler were last month granted 13.4 billion dollars in emergency loans from the US government as they struggle to survive a collapse in auto sales amid a deepening recession.

They, along with Ford, are also in the midst of submitting requests to access 25 billion dollars in loans to help fund the development of more fuel-efficient vehicles in accordance with the new rules.

General Motors said Monday it is working aggressively on technology that "matches the nation's and consumers' priorities to save energy and reduce emissions."

"We look forward to contributing to a comprehensive policy discussion that takes into account the development pace of new technologies, alternative fuels and market and economic factors," GM said in a statement.

GM officials said privately that they hope the review ultimately leads to a comprehensive US energy policy in which automotive fuel-economy is only one element.

The review should also help free up money for additional research and development, they said.

"There is money available," said one GM official, who asked not to be identified.

The Alliance of Automobile Manufacturers, which represents 11 different Asian, European and US carmakers, said it hopes the review leads to one nationwide standard.

"The Alliance supports a nationwide program that bridges state and federal concerns and moves all stakeholders forward," president Dave McCurdy said in a statement.

"We are ready to work with the Administration on developing a national approach."

Some Republican opponents, however, were quick to attack Obama's move as a devastating blow to an already crippled industry.

"Today's announcements will absolutely destroy jobs in Michigan," said Michigan congressman Mike Rogers.

"With the stroke of a pen, the President has unleashed a hornet's nest of new local, state and federal regulations on the auto industry. There is no way to know how much money this will cost taxpayers and workers, but we can be certain that it makes a bad situation worse."

Environmentalists, however, say the current rules are too lax and cite a Department of Transportation analysis which shows automakers can meet the average fuel efficiency goal by 2015, five years earlier than currently required.

After years of battling the Bush administration on climate change issues, environmentalists had high praise for Obama.

"Amidst the array of challenges facing his administration, President Obama's actions today send a clear signal to America and the world that his administration will play a leadership role on energy and global warming," said Phyllis Cuttino, who directs the Pew Environment Group's global warming campaign.

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