Formula One faces its biggest crisis in 40 years and must act immediately to cut costs further, International Automobile Federation (FIA) president Max Mosley said on Thursday.

"It's by far the biggest (crisis) since I've been involved in the late 1960s," the Briton told reporters when asked how the current situation, with teams and sponsors suffering in the credit crunch, compared to the oil crisis of the 1970s.

Japanese manufacturer Honda has already pulled out of the sport, with their 700-strong team still to be sold, while some sponsors have also withdrawn.

Mosley was concerned that the situation could deteriorate further.

"For 2010 we want to see the (team) budgets come right down, to the point where the FOM money (television revenues and prize money) plus very modest sponsorship equals the cost of going racing," he said.

"The teams, as I understand it, agree with the principle but they don't want to do it that quickly. I think we are going to have to do it that quickly."

Mosley said the sport, with teams like Honda spending an estimated $300 million last year, had become unsustainable some time ago.

"There has been a Formula One bubble which rivals any credit bubble or housing bubble or IT bubble and there seems a reluctance to recognise that," he said.

Although 10 teams, including any purchaser of Honda Racing, are signed up for the season starting in Australia [Images] on March 29, there are fears of a domino effect further depleting the grid by 2010.

BMW [Images], FIAT, Mercedes, Renault [Images] and Toyota [Images] all own or have significant stakes in teams and all are suffering in the downturn with factories closed, staff laid off and sales plunging in some key markets.

"They (the manufacturers) are looking for cost-cutting everywhere," said Mosley.

"The feedback I am getting from some (company) CEOs is 'we want to see Formula One sorted out but if it becomes a nuisance we will just stop it'."

However, Mosley said there could be 12 teams next year if the right action was taken, with a decision needed by the European Spring.

"What we are trying to do is to make it easy for independent teams to come in," he said. "That would be the efficient way of filling the gap.

"But that depends on getting this done quickly. If we don't get a move on, it won't happen.

"In the absolute worst case, we have in our contract with (Formula One's commercial supremo) Bernie (Ecclestone) that if there are insufficient Formula One cars we will fill it (the starting grid) up with cars from other categories," he added.

The sport has done that before, notably in 1952-53 when Formula Two cars raced with the main grand prix teams and in 1969 when there were only 13 Formula One cars on the starting grid at the Nuerburgring in Germany [Images].

"For that to happen would be very unfortunate because at the moment we are in a position to arrange the rules so that we could get independent teams in," said Mosley.

The FIA has said it wants to cut costs so that teams can be competitive on around 50 million euros ($64.05 million) a year, less than a quarter of what some teams spent last season.

It has argued that could be achieved by the use of more standard parts, in addition to making engines and gearboxes last for longer, as well as banning testing and much aerodynamic development.

In addition, the governing body has suggested all teams should get a share of the revenues rather than just the top 10 at present.

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