US technology giant Intel is to pump 2.7 billion dollars into a plant in southern Israel creating 570 new jobs, the Israeli government said on Tuesday.

The investment in the chip fabrication plant in Kiryat Gat, where the unemployment rate is among the highest in the country, will be spread over eight years from 2011, the finance ministry said.

The Israeli government will make a grant to the company of 187 million dollars to be disbursed over the same period, subject to approval by parliament's finance committee, the ministry added.

"This investment by Intel is of strategic importance to the strengthening of industry, assurance of production and anchoring Israel as a leading technological country," the ministry statement said.

It said the company had also pledged to add a further 50 jobs at its Jerusalem research and development centre.

Intel's web site describes the company as Israel's largest private sector employer, with 6,600 staff in seven towns, and one of the country's leading exporters.

It started its Israel operations in 1974 with five employees.