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By Raymond Colitt

BRASILIA, Aug 10 (Reuters) - Deforestation of the Amazon rain forest in Brazil fell by about a third in the 12 months through July to the lowest rate in at least seven years, the government said on Friday.

More controls on illegal logging, improved certification of land ownership, and economic development projects that preserve the forest were driving deforestation down, authorities said.

An estimated 9,600 square km (3,707 sq miles) of the world's largest rain forest were cleared in the year ended July 31, compared to a revised 14,039 sq km (5,417 sq miles) the previous year, the environment ministry said.

The findings are based on a preliminary study of satellite images and have a margin of error of plus or minus 10 percent. The final report is expected by November.

"It's a great achievement for Brazilian society. It reflects a new environmental governance," Environment Minister Marina Silva told a news conference in the capital Brasilia.

It is the lowest deforestation rate since 2000. The highest recorded was in 2004, at 27,429 sq km (10,590 sq miles).

But ministry officials say a revision of historical data using new methodology will show it to be the lowest in three decades.

"It is the lowest deforestation rate since the 1970s," said Joao Paulo Capobianco, executive secretary at the environment ministry.

Environmentalists agreed progress had been made but said a rise in commodity prices this year could fuel renewed destruction.

"Awareness and policies improved in the federal and state governments, but the real test is if rates fall during a commodity price rally," said Paulo Moutinho, coordinator at the Environmental Research Institute of the Amazon.

"I'm optimistic but it's too early to celebrate," he added.

Rising grain prices in 2003 led farmers to expand their planted areas, pushing the agricultural frontier deeper into the forest.

Brazil has repeatedly had to fend off criticism by its main competitors that some of its leading farm exports are contributing to destruction of the Amazon.

The government of President Luiz Inacio Lula da Silva increased police raids on illegal logging and expanded protected areas while also building roads and hydroelectric plants in the region, which conservationists fear could increase deforestation in the long term.

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