The Office for National Statistics said gross domestic product contracted 0.3 percent in the July to September quarter, an improvement on last month's first official reading of 0.4 percent that surprised forecasters anticipating an exit from recession.

The small upward revision supports forecasts by the Bank of England and the government that Britain will return to growth in the fourth quarter, potentially giving Prime Minister Gordon Brown a much needed boost as he heads into a general election year.

Britain's recovery from its worst economic downturn since official records began in 1955 is lagging behind the United States and eurozone, which have already recorded renewed growth.

The domestic economy has now contracted for six consecutive quarters and GDP was down 5.1 on the year _ revised upward from 5.2 percent a month ago.

The Statistics Office said that growth in the volume of output in manufacturing, the services industry, distribution and transport services were all revised up from initial estimates. Output in growth product industries, however, was revised downward.

The data also showed that firms continued to run down inventories sharply for the fourth straight quarter, marking a record decline over the past year. Economists note that could lead to a rebound in growth once destocking is over, although the Statistics Office pointed out that inventories fell for 11 consecutive quarters in the 1990s recession.

In other positive signs, consumer spending stabilized after contracting over the previous five quarters, while investment fell at a much reduced rate. Net trade, however, was negative.

Britain was hit particularly hard by the global credit crunch because of its huge financial sector, where the government was forced to carry out a multibillion pound bailout of major banks, and higher levels of personal debt among consumers. Like the US, it also faces a collapsed real estate bubble.

Economists said the anticipated upward revision in GDP should provide some cautious confidence on the economy, the likely main factor influencing voters in a general election that must be held by June 2010.

Brown's ruling Labour Party has started to claw back ground against the leading opposition Conservative Party, with an Ipsos Mori poll in the weekend Observer newspaper showing the Conservatives' lead trimmed significantly to six points.

"Latest data and survey evidence point clearly to the economy finally returning to growth in the fourth quarter, and we suspect the economy could well expand by around 0.5 percent quarter-on-quarter," said IHS Global Insight economist Howard Archer.

"Nevertheless, serious economic and financial obstacles to significant, sustainable growth remain, and we suspect that recovery will be gradual and prone to losses of momentum," he added.

Still, many economists believe that Bank of England forecasts of growth of 2.2 percent next year and 4.1 percent in 2011 are optimistic.