Iranian President Mahmoud Ahmadinejad has inaugurated a policy to encourage population growth, dismissing decades of internationally acclaimed family planning as ungodly and a Western import.

Iranian President Mahmoud Ahmadinejad, seen here holding a baby in Nicaragua in 2007, hopes to boost population in his native country. (Esteban Felix/Associated Press)The new government initiative will pay families about $980 Cdn for every new child and deposit another $98 or so annually into his or her bank account until age 18.

Parents will also be expected to pay matching funds into the accounts.

"Those who raise idea of family planning, they are thinking in the realm of the secular world," Ahmadinejad said during the inauguration ceremony on Tuesday.

The initiative is expected to undo years of efforts to boost the economy by reducing population growth.

Ahmadinejad has stated previously that he wants to boost Iran's population, estimated to be 75 million, to 150 million.

The program would be especially attractive to lower-income segments of the population, which formed the backbone of Ahmadinejad's support in the 2005 and 2009 elections. The president has promoted populist policies throughout his tenure, even though an estimated 10 million Iranians live below the poverty line.

It is unclear how Ahmadinejad hopes to fund the initiative.

'2 children are enough'

Iran waged a successful family planning campaign across the country in the early 1970s that included banners in public health care centres reading, "Two children are enough."

It was reversed after the 1979 Islamic revolution, only to be brought back 10 years later when the population ballooned and the economy faltered.

Iran reduced population growth throughout the 1990s by encouraging men to get vasectomies and both sexes to use free or inexpensive contraceptives. Perhaps as a result, the country's population growth rate dropped from its 1986 height of 3.9 per cent to just 1.6 per cent in 2006.

Ahmadinejad caused public outcry, however, when shortly after he was elected in 2005, he said two children per family were not enough and urged Iranians to have more.

Under the initiative's rules, children can withdraw the money at age 20 and use it for education, marriage, health or housing.