The race will be held on a track now under construction on Yas, a leisure island off oil-rich Abu Dhabi, he told reporters.

Ecclestone signed the agreement granting Abu Dhabi the right to host the race for seven years starting in 2009 with a representative of the emirate's government in the presence of Crown Prince Sheikh Mohammad bin Zayed al-Nahayan.

Abu Dhabi is the largest and wealthiest of seven emirates making up the UAE.

The contract can be extended beyond seven years, Ecclestone said.

The signing followed a show by Formula One drivers led by world champion Fernando Alonso of Spain watched by thousands of fans.

The UAE will become the second country in the Middle East to host the race after Gulf Arab partner Bahrain, which hosted its first Grand Prix in 2004.

The track on Yas island will be 5.5 kilometers (3.5 miles) long, with 2.5 kilometers (1.5 miles) reserved exclusively for the race.

The plan to hold the Formula One Grand Prix on Yas is part of a project, announced in November, to turn the island into a premier leisure destination at a cost of 40 billion dollars.

The island will have "a Ferrari-themed park, museum and theater... linked to a top quality motor race track on which visitors can experience the thrill of the exclusive Ferrari Driving School (Pilota Ferrari), kart track and dune buggies," according to project developers AlDar Properties.

The first phase of the project is due to be completed in 2008 and the entire venture will be completed in 2014 on the 2,500-hectare island which has a 32-kilometer (20-mile) Gulf shoreline.

It is part of a series of multi-billion-dollar ventures launched by Abu Dhabi in a bid to claim a larger share of the region's booming tourism industry.