TOKYO: Toyota Motor said Friday that global sales of its hybrid vehicles had topped the two-million mark since their launch in 1997, led by the Prius -- Japan's top-selling car for the past four months.

Toyota passed the new milestone just two years and three months after its hybrid sales reached the one-million mark, helped by brisk demand for its remodelled Prius which was launched in mid-May.

The company said that as of August 31 it had sold about 2,016,900 hybrids, which run on a combination of petrol and electricity and are in strong demand because of concerns about high fuel prices and global warming.

Toyota sold 21,669 Prius vehicles in Japan in August, keeping the top rank in the car market that it has held since May, the Japan Automobile Dealers Association said.

With government tax breaks and subsidies spurring growing interest in fuel-efficient vehicles, rival Honda sold 7,900 of its Insight hybrid in August.

Automakers hope that the popularity of fuel-efficient cars will breathe new life into the ailing market, which was battered by the global recession.

Japan's domestic vehicle sales showed the first year-on-year increase in 13 months in August, the same association reported earlier in the week.

Toyota and Honda are going head-to-head in the fast growing market. The Insight was the best-selling hybrid in April in Japan before being overtaken by the Prius.

The Insight sells at 1.89 million yen (20,410 dollars) while the Prius has a price tag starting from 2.05 million yen.

Rival Nissan is staking its future on pure electric vehicles and plans to start selling its first such car in late 2010.