Fiji's water bottling industry says it has re-started production and called back all staff after the interim regime decided to drop a new tax.

The interim government introduced a tax requiring the bottlers to pay twenty cents for every litre of water they sell as a compensation for the extraction of water.

The bottlers however stopped all production and filed a lawsuit yesterday, saying it puts their industry, and more than 700 jobs, at stake.

A spokesperson for the bottlers, Jay Dayal, says they have yesterday received a surprise call from the interim attorney general and were able to reach a compromise.

"The government has agreed to withdraw totally the twenty cent per litre tax. We are very pleased that at least the prime minister and attorney general intervened in the matter and resolved the whole issue. And now the bottlers will get together with the government and work out a form of compensation that is suitable to the government for the resource that we are extracting."

Jay Dayal says they have resumed local sales and will start exporting today.

Posted at 03:40 on 24 July, 2008 UTC