Raw corn is shown as it is unloaded for processing at the Lincolnway Energy plant in the town of Nevada, Iowa, December 6, 2007. REUTERS/Jason Reed

OTTAWA (Reuters) - Government legislation that will require all gasoline sold in Canada to contain 5 percent ethanol by 2010 passed the House of Commons on Wednesday.

The bill, which also calls for diesel to contain 2 percent renewable fuels by 2012, won the support of the main opposition Liberal Party but was opposed by two smaller parties that had voiced concern about food-crop production being diverted to fuel.

However, the governing Conservatives and the Liberals have both backed the idea, arguing that only a small portion of food crops such as corn will be used to make the biofuel.

The bill must now be approved by the Senate, where passage is likely since it is dominated by the Liberal Party.

The legislation would create demand for an estimated 2 billion liters of ethanol and 600 million liters of biodiesel.

Canada has 16 ethanol plants built or under construction, according to industry data, with a total capacity of 1.6 billion liters produced from corn and wheat.

There are currently three biodiesel plants with a combined capacity of 97 million liters, mainly using animal fats. A plant that would produce 225 million liters of biodiesel from canola oil is under construction in Alberta.

The United States has mandated that 9 billion gallons (34 billion liters) of biofuel be sold in 2008, the equivalent of nearly 8 percent of anticipated gasoline demand. That amount will slowly increase each year to 36 billion gallons in 2022.