(Adds finance minister's comments, details)

By Lin Noueihed

BEIRUT, Oct 16 (Reuters) - Lebanon, still struggling to recover from a devastating war with Israel, said on Monday it would hold a long-awaited aid conference in Paris on Jan. 15.

"It has been decided, and this is the decision that the cabinet has taken today, that the conference will be held in Paris ... on January 15th, 2007," Prime Minister Fouad Siniora told reporters after a cabinet meeting.

He said French President Jacques Chirac had said he was prepared to host the conference in the French capital, adding that Malaysia and Russia had already agreed to participate.

Lebanon was due to hold an aid conference last year to help it cope with a public debt of around $38 billion, whose servicing consumes at least two-thirds of government income.

But the meeting was repeatedly postponed amid political bickering over an economic reform programme which the government had hoped would encourage lenders to be generous.

Israel's war with Hezbollah in July and August left much of southern Lebanon in ruins and crippled the country's economy, reviving the urgent need to hold the conference.

Finance Minister Jihad Azour said Lebanon would request more aid in the form of donations -- it had originally planned to ask mainly for soft loans -- because the war had added to the small country's economic problems.

Azour declined to say how much cash Lebanon would seek but said the aid would still be accompanied by reforms to increase state revenues and cut spending, especially on the state power company that loses $700 million to $1 billion a year.

Lebanon also hopes to push ahead with long-delayed plans to liberalise the telecoms sector, he said.

"We will be asking mainly for donations because the problems of the war mean loans are no longer enough," Azour said.

"This aid should be accompanied by reform... Aid without a new start for Lebanon will be a big opportunity missed."

EMERGENCY RELIEF

The International Monetary Fund (IMF) has said it expects Lebanon's economy to contract 5 percent this year after the conflict and estimated Lebanon suffered $3.5 billion in damage in an Israeli bombardment that began after Hezbollah captured two Israeli soldiers on July 12.

Lebanon received billions of dollars in emergency relief during and after the war and the finance ministry has just completed a report detailing the aid received. It also plans to monitor how the money is spent.

International donors pledged more than $940 million in August for Lebanon's immediate relief efforts.

Lebanon's state relief agency got over $100 million in aid during and after the war and another $100 million came through the United Nations, which will also run a fund to manage $200 million in aid that did not go to particular organisations.

Beyond that, Saudi Arabia, Kuwait, Qatar and the United Arab Emirates have donated over $1.2 billion to help with rebuilding efforts and the World Bank has approved a grant of $70 million to support the Lebanese government's reconstruction efforts.

The Paris conference will be the third of its kind for Lebanon. A similar meeting in 2002, also in Paris, raised around $4 billion from Western, Arab and Asian lenders and helped Lebanon avert financial crisis, though reforms promised at the time never materialised due to political splits.

The government had initially hoped to hold the next debt aid conference in Beirut, but Azour said Paris was chosen to ensure high-level participation.

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