Citroen will return to the world rally championship in 2007 after pulling out at the end of this season, the French manufacturer has announced.

The carmaker added in a statement that France's world champion Sebastien Loeb would be able to compete in a privately-entered Xsara car next year.

The French manufacturer said the decision to return was due to measures agreed by the governing International Automobile Federation (FIA) that would significantly cut costs.

"The decision to return to the world rally championship was taken very quickly," said team boss Guy Frequelin. "The new regulations allow us to meet our budget targets. There is no longer anything standing in the way of our return to the sport."

Citroen said 2006 would be a year of transition, with Loeb in a private team while they revived their C4 development programme.

Loeb has already won his second successive title while Citroen are battling stablemates Peugeot for the manufacturers' title. Peugeot are also pulling out at the end of the year.

Citroen won the title in 2003 and 2004. The FIA announced major changes to the championship on Wednesday, with the season to be run from August to May from 2007 instead of January to November.

Sign up to our free newsletters

Get the best updates straight to your inbox:
Please select at least one mailing list.

You can unsubscribe at any time by clicking the link in the footer of our emails. We use Mailchimp as our marketing platform. By subscribing, you acknowledge that your information will be transferred to Mailchimp for processing.