The decision is based on an investigation of the cost-benefit ratio, which found that widening the scope of legislation first voted in December 2005 would be too costly for industry and of little benefit to consumers.

The Australian fruit and vegetable sector had welcomed the initial changes to country of origin labeling that will see loose produce obliged to reveal the country of origin, whether imported or from Australia.

However it had lobbied the regulators to extend the new laws to packaged produce containing more than one kind of fruit or vegetable, typically bags or cans of mixed vegetables or blends of fruit juices.

Under the recently adopted legislation, which comes into force on 8 June, a bag of mixed frozen vegetables containing peas from Australia and carrots from China cannot carry two countries of origin on the label.

It could, under the old Trade Practices Act, specify that the product was 'made in Australia' if 50 per cent of its value was added within Australia.

But John Roach, chief executive of the vegetable growers association Ausveg, says that country of origin is inextricably linked to product quality and plays a significant role in consumer choice.

"There is currently a huge debate about pesticide levels on imported produce. If a consumer is aware of this, he deserves to know where the vegetables in a product have come from," Roach told AP-Foodtechnology.

While the government-funded study by the Australian food authority (FSANZ) found only 10 per cent of consumers would appreciate this extra information, Roach says that not including this information suggests that producers have something to hide.

"We think our labeling laws are soft and not likely to change. We know that enforcement of compliance to labeling is weak. So using country of origin labels forces producers to stand by the quality of the product and offers them brand value," he added.

Roach says that country of origin labeling on canned or frozen Australian produce would "position Australia very strongly internationally" and also raise the bar for quality across the board.

Ausveg has also rubbished the claims made by the government that new labeling rules will prove too costly for the industry.

The FSANZ study suggested that extending the labeling rule will cost Australians A$120 million a year based on extra costs to growers as well as processors passing on the costs incurred by label changes to consumers.

"To justify the costs imposed on all consumers, the value of processed horticultural products affected…would need to rise by at least 94 per cent for the 10 per cent of consumers who might value the extra information provided. Based on consumer research, this seems highly unlikely," said the report, available on the FSANZ website.

However Roach says that if phased in gradually, the changes would cost 'virtually nothing'.

"Processors change their lines multiple times each day and labeling codes are altered with the flick of a computer button. Changing technology for labeling is a continuing cost of doing business," he said.

The new study will however mean that the government does not back the proposal to extend country-of-origin labeling when it is considered this week by the Australia and New Zealand Food Regulation Ministerial Council.

From 8 June, all unpackaged fresh and processed fruit, vegetables, nuts and seafood must say which country they come from, including Australia. Unpackaged fresh and processed pork products must also be labelled with their country of origin by 8 December this year.

An extension to this rule, where two different fruits and vegetables were included, would have mainly affected fruit juices and canned and frozen fruit and vegetables.

The government also announced that it will set up a working group to develop recommendations in relation to accurate food labelling. Run by the Agriculture, Fisheries and Forestry ministry, it will develop a voluntary 'Australian Grown' labelling scheme, as well as examine provisions in the Trade Practices Act, to better reflect the 'content' of packaged food products.

Ausveg welcomed the move, suggesting that a separate Trade Practices Act legislation for food could help address unresolved issues in fruit and vegetable labeling.