Shipping Minister Akbar Hossain told reporters that the cabinet agreed to drop a provision in the Bangladesh Flag Protection Ordinance that protected local shipping companies from open competition.

Last week foreign shipowners had started to boycott Chittagong's port after Bangladesh's Supreme Court ruled that the 20-year-old law - which had been ignored for most of its life - should be enforced.

The case had been brought by a cartel of local shipping owners, the BBC's correspondent says, in the hope of enforcing the rule that foreign ships should ask permission before loading or unloading at the country's biggest port.

Till now, Bangladeshi shippers have not had enough ocean-going vessels to take advantage of it, with 90% of the cargo loaded onto foreign-flagged vessels.

"We have received a letter of commitment from the Shipping Ministry that the Flag Protection Ordinance would be amended", said Jamaluddin Qader Chowdhury of the Chittagong Feeder Trade Committee, a lobby group of five foreign ship operators.

There are currently only three domestic shipping companies in Bangladesh that operate feeder vessels between Chittagong and Singapore.

Damage

The government of Prime Minister Khaleda Zia promised to amend the 1982 law in the face of the economic damage that even the brief stoppage was causing.

Exporters said that up to $16m of foreign goods - mainly clothing, which makes up 80% of Bangladesh's $6bn in annual exports - were stacking up at Chittagong with each day of the strike.

The decision to change the law, Mr Hossain said, resulted from the discovery that Bangladeshi flag carriers could handle only up to 20% of the total containers routed through Chittagong.