MONACO (AFP) - Monaco plans to expand its tiny territory by building a six hectare peninsula into the Mediterranean, the city-state's monarch Prince Albert announced on Friday.

"I have decided to launch an extension into the sea to the east of the principality after having studied various proposals since 2008," Prince Albert said in an interview in the daily Monaco Matin.

The affluent city-state of 2 sq km has already extensively used land reclamation as its casino and its policy of no income tax on individuals has attracted the world's wealthy.

The project is to be located near the Grimaldi Forum congress centre, and at up to 6 hectares, would add 3 per cent to the city-state's territory.

At the end of 2008 Monaco abandoned plans for a 12 hectare land reclamation project that would have provided residential space for 3,000 people.

The global financial crisis was the reason cited behind the move, but it would have also likely faced fierce opposition from environmental groups due to its proximity to a marine reserve.

"I will pay particular attention to ensure the project respects the strict environmental rules that I will impose, during the construction as well as during the use of the new surfaces created," said Prince Albert.