The alliance of Montreal hoteliers has agreed to apply a one per cent 'grand prix' tax to the price of rooms in an effort to rescue the axed Canadian formula one race.

According to the French language newspaper La Presse, the Montreal hotel association will increase the room tax from three to four per cent, with the extra money to go to the organisation of the annual race held at the nearby Circuit Gilles Villeneuve.

The newspaper said the proposal could generate up to $5 million per year.

With the Quebec and Canadian governments each promising $2.5 million apiece, the grand prix bailout pool would therefore be set to double to $10m.

The rescue plan will reportedly be presented to F1 chief executive Bernie Ecclestone in London next Thursday.