''We have put comprehensive proposals to the Chinese through the Joint Liaison Group,'' he said.

But it remained China's responsibility to clarify its law in order to spell out who would be entitled to such a right.

''Apart from anything else, right of abode on the first of July, 1997, can be determined only by reference to a person's nationality,'' he said.

''And only the Chinese Government can clarify Chinese Nationality Law.'' ''We have already held informal talks on this subject and further talks will be held in Hong Kong later this month,'' he said.

The problem of right of abode of those Hong Kong Chinese residents who held second passports had attracted great public concern after it was revealed that such people would be considered ''non-Chinese'' under Chinese law.

The group, estimated to amount to 400,000, would need to re-acquire the right of abode under the Basic Law.

So far, Britain and China had failed to agree on a set of concrete arrangements under which people with second passports could be entitled to regain the right of abode.

Mr Asprey reiterated that the Government supported an arrangement which was ''simple and straightforward''.

Speaking on the issuing of the future Special Administrative Region (SAR) passports, Mr Asprey said there were ''clear advantages'' for the Immigration Department to be allowed to do so.

''There are clear advantages for a smooth transition in Hong Kong travel documents continuing to be issued by the Immigration Department. They have the experience, the expertise and the records necessary for this task,'' he said.

Director of Immigration Laurence Leung Ming-yin said last month that it would take at least three years to devise a system to issue the SAR passports before the change of sovereignty.

Liberal Party legislator Howard Young, whose motion to urge the Government to take positive steps to ensure freedom of travel after 1997 was unanimously passed, suggested setting up a separate ''passport agency''.

He said the agency would act as a processing centre for SAR passport applications on behalf of the future SAR government.

''Whilst China may view passport issue as a matter involving sovereignty and feel reluctant to be seen to be asking a foreign government to act on its behalf, a 'passport agency' could be a neutral medium to whom certain tasks could be delegated.'' Mr Young, who represent the tourism industry, urged China immediately to tackle the task of issuing SAR passports in a ''timely and pragmatic way''.

At the moment, British Dependent Territory Citizen ) and British National Overseas passport holders enjoy visa free entry to more than 70 countries.

There are 1.9 million Hong Kong British passports and 1.2 million Certificate of Identity holders.

''To process hundreds of thousands of passport applications requires resources. The Immigration Department processes 49,000 passports and [Certificates of Identity] a month. This means it would take 11 months to issue even if only one-tenth of Hong Kong's population wanted an SAR passport.'' United Democrat legislators, on the other hand, echoed Mr Asprey's comments and urged China to clarify the criteria under which Hong Kong Chinese with a second passport could be regarded as permanent resident after 1997.

United Democrats James To Kun-sun said the future arrangement should be ''open, fair and simple''.

Another United Democrat, Dr Huang Chen-ya, who holds an Australian passport, said the two governments should immediately clarify the grey area in the Basic Law.

''These grey areas might be manipulated by radical racialists to discriminate against those who hold a foreign passport,'' he said.

Maverick independent Chim Pui-chung asked whether Governor Chris Patten would fight for the right for the 1.2 million Certificate of Identity holders to obtain visa-free entry to Britain.