Despite having no physical presence in China, Google already accounts for about 20% of online searches there.

The licence will enable it to compete more effectively with rival Yahoo and domestic providers.

Chinese opportunity

Web-based services such as search engines are heavily censored in China with many firms preventing people from gathering information on sensitive political and moral subjects.

Pornographic sites and those providing information about the Tiananmen Square massacre in 1989 and other crackdowns on political dissent are among those proscribed.

However, China offers a potentially lucrative market for internet companies as it is home to an estimated 94 million web surfers, second in size only to the United States.

"As part of our studying and learning about this market, we have obtained a licence for a rep office but have no employees in China at this time," a Google spokeswoman told Reuters.

Chinese users currently accessing Google's main site can choose to be directed to a specific Chinese language site.

The US company has now secured its own Chinese web address - www.google.com.cn - although Google declined to elaborate on how it planned to develop the site.

Google interest

According to web consultancy Shanghai iResearch, Google already has a 21.2% share of web searches in China, making it the country's third most popular web search engine after Baidu.com and Yahoo.

Google last year acquired a small stake in Baidu, which is looking to list its shares overseas.

Competition in the Chinese web services arena is hotting up.

Internet firm Sina is due to launch a Chinese language search engine later this year while Microsoft announced plans on Wednesday to develop a more advanced version of its MSN internet portal.