The Bill was supported by the Senate's right-wing majority, members of President Nicolas Sarkozy's party, but rejected by the Socialist opposition.

Senators also adopted other key changes to rules on strikes, tightened criteria for unemployment payments, and freed up the economy with plans to bring down the cost of living by boosting competition.

The measures were approved by the lower house, the National Assembly, earlier this month, and now become law with the backing of the Senate, where Mr Sarkozy's UMP party has a majority.

The change most hotly contested by the Socialists and the trade unions is the move to let companies ditch the 35-hour work week, a measure brought in by a Socialist government 10 years ago and denounced by conservatives as a drag on France's competitiveness.

The new law maintains the working week at 35 hours but gives businesses the right to negotiate directly with employees to decide their working hours.

The 35-hour week was an initiative aimed at cutting unemployment and the French statistics institute INSEE said it created 350,000 new jobs between 1998 and 2002, but at the cost of billions of euros in state aid to companies.

Public opinion polls show the French still view the 35-hour week as a progressive measure they do not wish to surrender.

The Bill concerning the unemployed, which passed the Senate last night, obliges jobseekers to accept the third ''reasonable'' job offer made to them, failing which their unemployment benefits will be stopped.

Another controversial measure approved by senators will force schools to look after children on their premises whenever teachers are on strike. AFP