Boeing executives announced the news in Seattle

The 200-300 seat aircraft is Boeing's first new commercial airliner for more than a decade.

The new model, which is not expected to enter service until 2008, is seen as vital for Boeing's future.

The US firm is facing fierce competition from Europe's Airbus, which is expected to overtake Boeing this year in terms of sales.

Boeing said its board had unanimously decided to start offering the 7E7 model for sale following a meeting on Monday.

The 7E7 is a game changer and we're anxious to begin offering it to our airline customers Harry Stonecipher, Boeing chief executive

"The company expects those sales proposals to result in firm customer commitments and a production go-ahead, or formal launch, in 2004," the firm said.

The aim is to start to assembling the jet in 2006 at Boeing's existing plant at Everett in Washington state.

Crucial move

Boeing is hoping that the new plane will generate enough interest to revive its fortunes.

The post-September 11 fall in air travel hit demand for Boeing's planes, and the company was forced to scrap plans for its Sonic Cruiser plane last year.

Boeing has also had to watch Europe's Airbus eat into its market share and win orders for its A380 super-jumbo planes.

And recently the company has fired its finance chief and seen its chief executive resign following a controversy surrounding defence contracts.

But Boeing's new chief executive Harry Stonecipher was emphasising the positive when he addressed workers on Tuesday.

"The board's decision validates the 7E7's compelling business case and the tremendous customer interest in this airplane," he said.

"The 7E7 is a game changer and we're anxious to begin offering it to our airline customers."

Cheaper running costs

The 7E7 will be Boeing's first new jet since the 777 in 1990.

It is expected to replace the 757 and 767 models, and is designed to use 20% less fuel than other planes by using lighter materials in the construction.

Independent aviation analyst Chris Tarry told the BBC World Business Report programme that the 7E7 was of vital importance for Boeing.

"It's often said aviation is a game and you bet the company, and I think for Boeing this is one of those projects," he said.

"Without it they're out of the civil aircraft industry and I don't see that happening."

He said he thought there was room in the market for both Boeing's 7E7 and the Airbus super-jumbo, as they would appeal to different customers.

"Some routes are appropriate for very large airplanes flying long distance, others are appropriate for a slightly smaller airplane," he said.