Mr de Villepin says France youth unemployment is unacceptable

Mr de Villepin said "urgent" action was needed to "bring the French labour market into the modern era".

More than 20% of France's 18 to 25-year-olds are unemployed - a figure double the national average of 9.6%.

Among the country's poorest communities youth unemployment stands at 40%, a figure largely blamed for the riots that swept across France last year.

'Such difficulties'

Young people have been left by the wayside in our society Dominique de Villepin, French Prime Minister

Central to the government's new measures are plans to introduce flexible youth job contracts for 18 to 25-year-olds, which would allow employers to terminate a contract within two years.

After two years, the contract would revert to a standard full-time contract.

Mr Villepin said employers would also be exempted for three-years from social security charges for young people who have been employed for more than six months.

"Young people have been left by the wayside in our society," said Mr Villepin, who, along with Interior Minister Nicolas Sarkozy, is widely expected to be a conservative front-runner in next year's French presidential elections.

"No democracy can accept leaving such a large proportion of its young people to confront such difficulties."

But Laurence Parisot, the boss of French business group MEDEF, raised doubts about the effectiveness of Mr Villepin's plans.

"Youth unemployment cannot be separated from unemployment in general," she told France's La Tribune newspaper. "Adopting an overall 'under 26 years' formula does not seem pertinent to me."