In the first signs of how the government will fulfil its 2007 election promise to ''seek to ban'' illegal timber imports, it is understood that establishing an offence is its preferred option.

The law would be established along with a voluntary certification and verification program for timber importers, which would be set up through bilateral agreements with developing nations such as Papua New Guinea and Indonesia.

Australia has already had discussions with the United States and New Zealand about common principles for any timber import certification program.

Under the timber law, Customs or other law enforcement agencies would investigate allegations of companies importing illegally logged timber.

At present there is no law or restriction for importing illegally harvested timber, but voluntary industry codes exist.

It appears the government has ruled out a hard ban which requires proof of legality before timber would be allowed in.

Ten per cent of all timber imports are suspected of being illegally logged. The value of illegal timber entering is estimated to be between $400 million and $840 million a year.

Illegal timber is usually harvested in national parks and other protected areas in developing countries such as PNG and Indonesia, then transported to a secondary country for trade. It enters Australia in a variety of forms such as building materials and furniture.

Details of the direction of government policy come as it prepares to release the final version of a report it commissioned from the economics firm the Centre of International Economics on the best approach to stop illegal timber entering Australia.

The centre's report, obtained by the Herald, recommends Australia consider only ''non-regulatory'' policies, such as capacity-building programs in developing countries and relying on existing voluntary industry codes.