Instead of being freed from the uncertainty of decades of asbestos-related disease claims, the new company, to be named Sucrogen, would sign a deed poll in favour of current and future claimants.

The government's lawyers said late on Friday that the ''permanent'' deed poll committing Sucrogen to pay asbestos compensation if the building products company proved incapable should be integrated into the scheme of arrangement CSR has asked the court to approve.

This would leave the assets available to meet compensation payable for exposure to CSR asbestos undiminished after CSR splits into two companies.

CSR mined asbestos until 1966 and manufactured it into building products until 1977. Last year it paid $47 million in compensation and it has a $447 million asbestos provision in its accounts.

The government's plan was revealed during a hearing on whether CSR's scheme booklet could be sent to shareholders for a vote on the demerger.

Justice Margaret Stone extended the hearing after hours to accommodate four intervening parties.

There was not enough time for CSR to reply to the views of the government, the Australian Securities and Investments Commission, James Hardie Industries and the Asbestos Injuries Compensation Fund, the body set up the NSW parliament and funded by James Hardie after a James Hardie compensation trust was found to be grossly underfunded in 2004.

CSR is expected to respond in writing and Justice Stone is expected to reach her decision without further oral submissions.

Earlier on Friday, CSR's barrister, Tom Bathurst, QC, said the time for a debate about the impact on asbestos compensation was when his client returned to court for approval after shareholders had voted on the plan.

The Australian Securities and Investments Commission disagreed, saying the judge needed ''a high degree of satisfaction that there will be a sufficiency of assets and cash flow to meet asbestos claims'' before convening the shareholder meeting.

ASIC's barrister, Robert Beech-Jones, SC, said divergent expert views on the likely size and timing of CSR's asbestos claims highlighted the uncertainties in predicting compensation for diseases that can take decades to develop.

The Asbestos Injuries Compensation Fund, which often shares liability for compensation with CSR, argued that the meeting should not be convened because the demerger would reduce the capacity of ''New CSR'' to meet asbestos claims.