China's State Council, or Cabinet, on Saturday asked local governments not to abuse a reform of rural land use to forcibly occupy the land by demolishing homes of farmers against their will.

A State Council circular published on the central government's website (www.gov.cn) said measures must be taken to correct wrong deeds and protecting rural residents' rights and interests must always be top priority of the reform.

A major goal of the reform, starting from 2008, is to encourage rural dwellers to move into new residential buildings like urbanites, while their old houses and surrounding land, often in small pieces, would be recultivated into farmland to be used more efficiently.

The move is designed to increase arable land while improving farmers' living conditions.

China faces a grave challenge of balancing land use for both rapid urbanization and enough farmland to secure food supply to 1.3 billion people.

The reform, which is still tried out in selected areas, allows local governments to use a portion of land, often the same amount as the newly-added farmland, for urban construction.

But the circular blamed some local governments for abusing the policy by putting excessive land for urban and property development, which had resulted in a spate of problems such as hasty land grab and forced eviction of farmers.

Local governments preferred to sell property to developers as a way to boost fiscal revenues and local GDPs.

The State Council stressed the aim of the reform should be increasing grain output and improving the livelihood of farmers.

"Farmers' interests must be always put first and their wishes must be fully respected," said the circular.

The land should first be reclaimed as arable land and then used for rural development. A portion of what is left can be used for urban construction with the approval of authorities. But the benefits from any increase in the value of the land must be returned to the countryside, the circular said.