OTTAWA, April 5 (Reuters) - Canada's auto industry has entered into a voluntary agreement with the federal government to cut greenhouse gas emissions in new vehicles, in an effort to help Canada meet its targets under the Kyoto protocol.

Ottawa and the auto sector said on Tuesday the agreement aims to cut emissions by new vehicles by 5.3 megatonnes a year by 2010.

In other words, it would keep greenhouse gas emissions at the present annual rate of 85.2 megatonnes by 2010 rather than rising to the projected annual rate of 90.5 megatonnes if nothing is done.

To do this, the Canadian auto industry will offer and promote a variety of fuel-saving technologies for new cars and light trucks. Some of these include hybrid powertrains, cylinder deactivation technology and advanced diesel technology.

"I'm particularly proud that we've reached this historic agreement voluntarily, which clearly shows the automobile industry is prepared to do its part to address climate change," Canada's Minister of Natural Resources John Efford said at the signing of the deal in Windsor, Ontario.

A joint government and auto group will monitor the annual performance to ensure progress, and if emissions targets are not met, the government could step in to regulate the industry.

"I do support the approach the government is taking with the automotive sector ... legalizing all this could have been a nightmare," Toronto-based auto industry analyst Dennis DesRosiers said in a note.

"Now that the automotive OEMs (original equipment manufacturers) are going to aggressively address greenhouse gas issues with the vehicles consumers buy new, I hope the government will have the strength to address greenhouse gas issues with the vehicles on the road," DesRosiers said.

He added that getting older vehicles off the road or getting consumers to better maintain them would do a lot more to help Canada meet its Kyoto commitments than anything the auto industry can do to help improve emissions.

Canada's ruling Liberal party has yet to come up with a final plan on how the country will meet its Kyoto commitments, which the opposition Conservatives say are too tough and green groups say are not tough enough.

In a good year, Canadians buy about 1.5 million new vehicles. About 19 million cars and light trucks in Canada are operating at less than peak efficiency or have old technology.