Formula One is poised to become a 26-car championship next season for which a £40m budget cap has been imposed.

Following Wednesday's meeting of the World Motor Sports Council in Paris, it was agreed the maximum number of cars permitted to enter would be increased to 26, two for each team.

After announcing a £30m cap in mid-March, the WMSC has now increased that figure by a further £10m, with the formation of a new costs commission to police the regulation.

The sport has not seen 26 cars on the grid for 15 years, with the budget cap designed to encourage new entrants.

The World Council, spearheaded by FIA president Max Mosley and F1 supremo Bernie Ecclestone, clearly feel, by raising the bar, it will not deter prospective new teams from signing up.

The additional £10m also allows the current teams a further degree of leeway, although they may still feel it does not go far enough.

Teams, though, will still have freedom of choice as to whether to be governed by the cap. However, those that opt out face certain restrictions.

Any team operating within the budget will be allowed to use movable front and rear wings and, most crucially, an engine not subject to a rev limit. Those teams will also be allowed unlimited out-of-season track testing, with no restrictions on the scale and speed of wind-tunnel testing.

A further 'start-up bonus' for the new teams is that, as commercial rights holder, Ecclestone has agreed to offer participation fees and expenses.

There will be an annual payment of $10m (£6.75m) to each new team, plus free transportation of two chassis, freight up to 10,000kg in weight, as well as 20 economy-class tickets for each race outside Europe.

Frank Williams, principal of the Grove-based WilliamsF1 team, said: “Williams has supported the introduction of a budget cap since the idea was first put forward early in 2008.

"Since then FOTA has made tremendous steps forward on costs but the rationale for a budget cap has also grown even stronger. We would like to see all the teams operating to one set of regulations and under a budget cap in 2010 and that is the position we will be advocating within FOTA when we meet next week.

"We understand that this will represent a serious challenge for some of the teams but we expect that FOTA will work together to find a unified and constructive way to take the FIA’s initiative forward.”