ATHENS

Last year's ban was very largely ignored because of exemptions for small bars and restaurants, complex rules and the failure to crack down on offenders, and Greeks routinely light up cigarettes in taxis, larger bars, or even at work.

"There were problems in the implementation of the law, there were grey areas and contradictions," the minister said. "We had to bring in new legislation ... From Sept 1, 2010, Greece will fully ban (smoking) in all public places."

Casinos and bars bigger than 300 square meters will be given 8 months to apply the law, she said.

More than 40 percent of Greeks smoke, making them the heaviest smokers in Europe, and nearly as many are exposed to smoking at work, according to a European Union poll.

Smoking-related diseases kill about 20,000 people a year, costing the country an annual 2.14 billion euros ($2.62 billion), the health ministry said last year.

Bar and restaurant owners had complained last year's law was too complicated and was hurting business. Some restaurant owners who had originally implemented the law put the ash-trays back on the table after losing customers.

The government will publish a draft bill in the coming days, Xenogiannakopoulou said.

Last year's ban, agreed under the previous, conservative administration, imposed fines of up to 500 euros on convicted smokers, while bars and restaurants risked losing their license.

Smoking is also becoming more expensive in Greece. The government agreed in talks with the EU and the IMF earlier this month to increase excise tax on cigarettes by 10 percent as part of austerity measures aimed at plugging the huge budget deficit.

(Reporting by Renee Maltezou; Writing by Ingrid Melander; editing by Tim Pearce)