France is to raise the retirement age from 60 to 62 in 2018 in an effort to get the country's spiralling public finances under control, the labour minister said today.

Eric Woerth called the measure - already hotly contested by the opposition Socialist Party and unions - a "real moral obligation", given France's burgeoning deficit and its ageing population, which he said threatens the viability of the money-losing pension system.

The French budget deficit was 7.5% of gross domestic product last year. The conservative government has vowed to bring it under 3% - the threshold set by the European Union - by 2013.

Mr Woerth said the reform will bring France more into line with other European countries, which have raised retirement ages and taken other measures to slash budget deficits.

The Greek crisis has given added urgency to France's plans to cut back.

Mr Woerth said the measure will be "responsible and fair", affecting workers in the public and private sectors in the same way.

It is to be instituted progressively, and will also stretch out the number of years people have to work to win full pension payments, Mr Woerth said.

Even before today's announcement, the measure had sparked angry reactions from Socialist politicians and unions. Yesterday, tens of thousands of people marched through Paris to protest against the plans.

Larger protests and strikes are likely to start in September, once much of the country returns from summer holidays.