THE Government is to sign away Britain's rights to 60,000 square miles of the Atlantic ocean around the granite outcrop of Rockall in a move which could potentially cost billions in future oil, fishing and minerals rights.

The Foreign Office confirmed yesterday that Robin Cook, the Foreign Secretary, will ratify the United Nations Convention on the Law of the Sea, an international treaty which forbids uninhabited rocks without an economy being used as a basis for territorial claims.

Britain's westernmost claims from next week will be the islands of St Kilda, 100 miles off the Western Isle of Harris. Rockall itself remains part of the UK because it is within 200 miles of St Kilda.

As a result of the decision Britain will have to immediately cede fishing and mining rights to an area in a 200-mile radius around Rockall. Much of the sea around the rock will be redefined as "international waters" ' and open to negotiation between interested parties. The decision will also reduce European fishing rights to the North Atlantic.

The announcement may reopen diplomatic disputes between Britain, Ireland and Iceland, which have laid claim to the 83ft high outcrop annexed by Britain in 1955.

Bob Allen, chief executive of the Scottish Fishermen's Association, accused the Government last night of squandering a potentially valuable area of sea. "We can't support giving up an area that size. Our boats now face international competition if they want to develop a fishery for unexploited deep water species."

The National Federation of Fishermen's Organisations also condemned the decision. A spokesman said: "Rockall is an important fishing area for British vessels. It is reprehensible that the Government has surrendered it without any consultation with the fishing industy."

But a spokesman for the Ministry Of Agriculture, Fisheries and Food said it would "barely affect" British catches, with no more than 0.2 per cent of the fish landed in Scotland each year coming from the area to be surrendered. "It will not affect British fishing quotas, and 95 per cent of the affected area will be open to British fleets."

A Foreign Office spokesman said Mr Cook, who will ratify the convention this week, will open negotiations with Ireland to agree a new fisheries boundary. He added that no part of the ceded area was licensed for gas or oil exploration although a number of licences given in April are right on its limits.

Although oil and gas exploration rights are based on the extent of the continental shelf rather than the Law of the Sea, it is anticipated that Britain may have to cede the seabed west of Rockall. Britain has spent 20 years quietly edging its claims into the Atlantic as deep sea oil drilling technologies have improved.

James May, director general of the UK Offshore Operators Association, said the implications for oil and gas would be examined. More than 20 of the world's largest companies are testing for oil in the Atlantic frontier.

Legislation may be needed if British industry wants to mine the deep seabed under the terms of the convention, said the Foreign Office.

The news was welcomed by Greenpeace, which has occupied Rockall for two months in protest at the industrialisation of the Atlantic.

The decision to ratify the convention ends a 20-year struggle by the Foreign Office to remove article 121, which outlaws territorial claims based on uninhabited rocks.

Britain has delayed signing the treaty since it came into force in 1994. It has now been signed by more than 100 countries, including Germany, France, China and Japan.

Whitehall has long been aware of the sensitivity of the decision and news that the Government had conceded was slipped out last week in a written answer by Mr Cook to the Labour MP for Blyth Valley, Ronnie Campbell.

Mr Cook said that by signing the convention Britain would gain trade advantages and greater leverage in tackling environmental problems.

Moving the centre of territorial measurement to St Kilda may itself be open to challenge because it, too, could be classified as uninhabitable and without an economy. The islands were evacuated in 1932 because they could not support the community that had lived there for an estimated 4,000 years.

St Kilda is owned by the National Trust for Scotland and is permanently inhabited only by a few soldiers on a missile tracking station. Postcards and books are sold, but otherwise it is totally dependent on the Outer Hebrides.