Turkey laid the foundations on Wednesday for a track to stage Formula One races from 2005 in a $100 million project hailed by the government as a crucial contribution to tourism.

The launch of the project followed the signing of a seven-year contract by Formula One and Turkish officials in London last month.

Turkish Prime Minister Tayyip Erdogan and Formula One supremo Bernie Ecclestone attended the launch ceremony in Istanbul, a sprawling city of more than 10 million people that straddles Europe and Asia Minor.

The government has said it will cover the costs of hosting the race, estimated to amount to $13.5 million in annual fees, and granted the use of state land for the $60 million track.

"We expect serious income from this project. We have set aside $27 million for it," said Erdogan.

The track is being built near Istanbul's newly-completed second airport on the Asian side of the city.

Environmentalists have opposed the project on the grounds that the track is being built at the site of a water basin, but officials dismiss the criticism.

Ecclestone said work on bringing Formula One to Turkey had been going on for some 10 years and predicted it would make a big contribution to local tourism.

The Grand Prix is expected to bring some three million tourists to Turkey, according to Erdogan.

Rallying and other motorsports are popular among the wealthy in Turkey, a European Union membership candidate of nearly 70 million people, but the country has no track suitable for F1.

Construction was to begin last month, but was delayed because of bureaucratic wrangling and sponsorship concerns.

Turkey is labouring under tight budgetary controls agreed with the International Monetary Fund after a punishing 2001 recession. But hosting a Formula One event is expected to bring in millions of dollars in tourism revenue.

Ecclestone has said he chose Istanbul ahead of other candidates because of its global stature and because it is more easily reached by road from other European Formula One venues.

Formula One grands prix usually take place only two weeks apart and it can take three days to set up or dismantle the necessary equipment.