BERLIN (AFP) - The German government reached an agreement Thursday on liberalising citizenship laws so that people born in Germany to foreign parents can hold two passports, the justice minister said.

The minister, Heiko Maas, said in a statement that he and Interior Minister Thomas de Maiziere had struck a deal on a draft law which would create a path to dual citizenship for thousands more people.

Maas called the plan "a very significant step toward a modern citizenship policy".

Those over the age of 21 who were born in Germany and have lived in the country for at least eight years or attended school here for at least six years will no longer have to choose between their birth country and their parents' country of origin.

Exceptions will also be made for those who have graduated from a German school or completed a vocational programme.

Allowing dual nationality was a key demand of the Social Democrats during negotiations with Chancellor Angela Merkel's conservatives that resulted in a hard-fought deal in November on teaming up in a left-right government.

The current rules state that children must choose by the age of 23 between taking a German passport or that of their parents' country of origin. The policy affects about 30,000 people a year.

European Union citizens, however, are already permitted to hold both German citizenship and that of their country of origin.

Representatives of Germany's three-million-strong Turkish community have expressed disappointment that the deal does nothing for those born abroad even if they have long resided in Germany.

They have said they would like to see everyone of foreign origin have the option of keeping more than one nationality.

The draft law is to be presented to the cabinet for approval "as soon as possible", Maas said, so the legislation can pass parliament this year.