JAKARTA - Indonesians woke Thursday to the prospect of sharply higher fuel bills after the government said it would hike subsidised fuel prices by nearly 30 percent to rein in the budget deficit.

The government set the figure on the upper limit of expectations late Wednesday despite widespread protests against the move ahead of elections next year.

The hike is designed to limit the impact of record world oil prices, which are blowing out the government's multi-billion-dollar fuel subsidy scheme and sucking state money out of social programmes.

"The figure is relatively final, it will be 28.7 percent," Finance Minister Sri Mulyani was quoted as saying on the state-run Antara news agency.

It was the first time a senior minister has put a figure on the price hikes, which have sparked almost daily protests since the government announced its intention to slash fuel subsidies earlier this month.

She did not say when the new price regime would be implemented, only that it would not be introduced until the government had finalised a package of measures designed to offset the impact on the poor.

A 28.7-percent rise would see the cost of premium gasoline in Southeast Asia's biggest economy climb to 5,790 rupiah (63 cents) a litre from the current price 4,500 rupiah.

President Susilo Bambang Yudhoyono says the move is essential to rein in the budget deficit and free up funds for spending on social programmes and the country's crumbling infrastructure.

The administration has already outlined plans for direct cash transfers to millions of poor families and for expanded rice distribution and healthcare subsidies in a bid to limit the political fallout.

But it is facing mounting opposition from the street as well as parliament, where most parties have turned against the plan in a bid to win favour with voters ahead of the elections.

Indonesia last raised its fuel price by 126 percent in 2005, sparking widespread protests.

Thousands of demonstrators took to the streets around the country Wednesday -- the 10th anniversary of the fall of dictator Suharto -- to condemn the latest proposed hike and demand protection from surging commodity prices.

"The rise of fuel prices will strangle us. It's hard for a housewife like me as the price of everything has risen even before the announcement" of the price hike, said one protester outside the presidential palace.

Economy Minister Budiono warned, however, that any delay in raising fuel prices would only worsen Indonesia's predicament.

"There are things that we should do if fuel prices aren't raised, and after consideration it will be much heavier for us all to bear," he was quoted by Detikcom online news as saying.

The government's fuel subsidies bill of 126.8 trillion rupiah (13.8 billion dollars) is based on assumed oil prices of around 95 dollars a barrel, but the cost of crude surged past 130 dollars a barrel for the first time on Wednesday.

The proposal to cut the subsidies is deeply unpopular even though most of the money goes directly into the pockets of relatively wealthy car owners.

The subsidies, which help keep fuel prices in the archipelago to the lowest in Southeast Asia, also outstrip Indonesia's total social spending and capital investment, according to the World Bank.

- AFP /ls