BEIJING, Oct 7, 2008 (AFP) - Beijing's municipal government said Tuesday it would raise gasoline and diesel prices to subsidise cleaner fuel development as the Chinese capital seeks to clear its smoggy skies after the Olympics.

The gasoline retail prices were raised by 200 yuan (29.2 dollars) per ton, or around three percent, and the diesel retail price was raised by 290 yuan per ton, or more than four percent, the city's government said in a statement.

Wholesale prices were also raised, the Beijing Municipal Commission of Development and Reform statement said, adding the price hike would help refiners develop cleaner fuels that meet European emissions standards.

The increase in Beijing, effective from Tuesday, is the first since the central government raised fuel prices nationwide by nearly 20 percent in June.

The Olympic host city has struggled to clear its notoriously smoggy skies and chronic transport congestion with wide-ranging measures.

Before the August Olympics, it started to supply the less polluting but more expensive Euro IV-standard fuel while dirtier fuel was still used in the rest of the country.

The city also brought in traffic control measures after the Games, though not as tough as the strict curbs on driving that took half the vehicles off the capital's streets during the Beijing Olympics and Paralympics.

China so far has not indicated whether it plans to raise fuel prices nationwide.