Lebanon will allow industries to import diesel directly amidst worsening fuel shortages, the caretaker industry minister said on Monday, effectively removing the subsidy for the fuel product.

"Subsidies for diesel will stop and we consider it stopped," Imad Hoballah said after the meeting.

Lebanon is battling an economic meltdown, described by the World Bank as one of the deepest depressions of modern history, that is threatening its stability.

Shortages of fuel and other basic goods have worsened in the past month.

Monday's decision came after a meeting with President Michel Aoun to try and solve the issue of diesel shortages for factories.

Hoballah said it was decided to allow industrialists to directly import diesel and some other petroleum derivatives without prior permission from the government, a requirement when the fuel was subsidised.

Fuel shortages have caused long power cuts and an increased reliance on private generators, that use diesel.