"Prices are approaching levels not seen since the first half of the 1993/94 season," the Australian Council of Wool Exporters said on Friday.

The Australian Wool Exchange (Awex) eastern market indicator (EMI) plunged 26 cents to 537 cents a kg clean at sales in Sydney and Melbourne. This was approximately the equivalent of 500 cents a kg clean on the basis of the former Wool International (WI) Eastern Market Indicator, the council said.

At Fremantle auctions, Awex's western market indicator dropped 23 cents to 496 cents a kg clean.

Pastoral group Wesfarmers Ltd said wool prices suffered dramatic falls at the opening of sales this week.

It attributed the fall to a combination of factors, most importantly the larger quantity of wool on offer and continuingsubdued world demand for raw wool.

The recommencement of stockpile sales by WI this week added to the market decline, it said.

After several weeks out of the market because of the Australian government's order that it freeze stockpile sales, WI returned to the market this week to sell 9,094 bales.

Because the government called a general election last Sunday, parliament has been prorogued and the government is unable to pass the necessary legislation to freeze the sales until after the election on October 3.

This week's sales left Australia's unsold wool stockpile at 1,099,551 bales.

"These market factors saw wool prices fall to their lowest level in four years," Wesfarmers said.

The council of exporters said relatively good competition this week for coarser micron wool on offer, coupled with continuing interest from Chinese customers, provided some encouraging signs for next week's Adelaide sale.

A total of 89,030 bales were offered for sale this week with 17.3 per cent passed in.

Auctionscontinue next week in Sydney and Adelaide with 61,000 bales rostered for sale.