The chamber said Hong Kong should move towards some form of full direct elections as soon as practicable after 2007-08.

While the chamber said it would not be drawn into the debate over the date for universal suffrage, it added: 'It appears that the demand in Hong Kong for early universal suffrage is growing daily, and 2012 may represent a target date in the mind of many.

'This political reality must be acknowledged.'

The chamber's views on post-2007 constitutional development represent a shift in the thinking of the business community, which has always preferred that the status quo be maintained. The chamber made the submission to the government taskforce led by Chief Secretary Donald Tsang Yam-kuen in August. It posted the document on its website last month, without notifying the media.

The consultation period on the taskforce's third report on constitutional development ends next Friday.

To broaden the representation of the Election Committee that will choose the next chief executive in 2007, the chamber recommends doubling its size to 1,600.

It proposes including 242 district councillors on the Election Committee to widen public participation in the selection of the city's leader. The 242 would be chosen from the pool of 529 district council members by an election based on proportional representation.

Unlike the Democratic Alliance for Betterment of Hong Kong and Liberal Party, which call for expanding Legco in 2008, the chamber believes the number of seats should remain unchanged at 60.

'The opening up of new functional constituencies may encourage competition and further division among various sectors. This may not be conducive to constitutional development given the eventual aim of full democracy,' it said.

The chamber said a British-style bicameral model, under which functional constituencies would be retained to provide checks-and-balances to a Legco whose members were returned by universal suffrage, could be an option for future political development.

The chamber's chief executive, Eden Woon Yi-teng, said the response from the government to its submission had been positive and officials had said they were looking closely at its ideas.

Anthony Cheung Bing-leung, a professor with City University's department of public and social administration, said the chamber's proposal was relatively liberal among the business community.

'The chamber's bicameral model indicates that it is still worried that the business sector would not be adequately represented in Legco when full democracy is introduced,' he said. 'But the proposal is inconsistent with the ultimate goal of universal suffrage.'

Reform Blueprint

Double the size of the Election Committee to 1,600

Keep the number of Legco seats unchanged at 60

Release a timetable for full democracy before 2007

Develop a British-style bicameral system