But at around 40 times the cost of leasing a conventional vehicle, it will still be years before the cars are economically viable for most consumers, officials conceded.

Toyota started leasing four fuel cell hybrid vehicles (FCHVs) to each of four government agencies -- the cabinet office, the trade ministry, the transport ministry and the environment ministry.

Powered by electricity generated from oxygen and pressurized hydrogen gas, the sleek silver vehicle, based on the Highlander/Kluger sports utility vehicle, seats five and has a range of up to 300 kilometers (185 miles) on one tank of hydrogen.

Toyota will charge 1.2 million yen (9,800 dollars) a month for each of the vehicles during the 30-month contracts.

Honda also leased one of its FCX fuel-cell passenger cars to the cabinet office for a 12-month contract at 800,000 yen a month.

"The delivery of the fuel-cell cars today is meaningful for Japan's energy policy," Prime Minister Junichiro Koizumi said at a ceremony at the prime minister's office.

Toyota also started leasing two Toyota FCHVs to University of California, Davis, and University of California, Irvine, respectively for roughly the same price.

Within a year, Toyota aims to lease 16 more fuel-cell cars in Japan and the United States.

Honda's FCX also made its North American commercial debut Monday, leasing a vehicle to the city of Los Angeles and the company is scheduled to lease four more to the city government, a Honda spokesman said.

Over the next three years, Honda hopes to lease 30 FCXs in Japan and the United States. The FCX seats four and has a range of about 355 kilometers for each tank load of hydrogen.

Trade Minister Takeo Hiranuma said fuel-cell cars reflected Japan's commitment to a clean energy policy.

Fuel-cell vehicles generate no harmful emissions and were one step ahead of other hybrid vehicles which combine conventional internal combustion engines with electric motors, he said.

In 1997 Toyota introduced its Prius hybrid vehicle, which it says produces up to 90 percent less harmful emissions than the average conventional car. It has so far sold 105,000 Prius vehicles in Japan and abroad.

Taiyou Kawai, general manager of Toyota's fuel cell research and development department, said there were still many hurdles to clear before fuel-cell vehicles would be widely used by individual consumers.

Cost is the biggest factor with each FCHV costing more than 100 million yen to produce, Kawai said.

"It won't be anytime soon for mass commercialization. It will maybe take us another 10 years," he told AFP.

Another major hurdle is the lack of hydrogen stations where fuel-cell vehicle drivers can fill up.

"Right now we have four hydrogen stations in Japan," Kawai said, adding there were none in Tokyo, although six such stations are expected to be built in the Japanese capital soon.

Last month a ThunderPower hydrogen fuel-cell bus built by US bus and recreational vehicle manufacturer Thor Industries Inc. and ISE Research of San Diego entered service with the Sunline Transit Agency covering 100 miles a day in California.

Local reports said it was the only fuel-cell bus in commercial service in the world.

SPACE.WIRE