Gross domestic product (GDP) rose 3.5 percent year-on-year in the three months through September, after climbing a revised 2.7 percent in the previous quarter, the National Economic and Social Development Board said.

"The rebound in the third quarter was due to the recovery of exports in the industrial sector, which was affected by the earthquake and tsunami in Japan," NESDB secretary-general Arkom Termpitayapaisit said at a briefing Monday.

Thailands GDP gained 0.5 percent in the third quarter from the previous three months, the NESDB reported.

But the NESDB revised its 2011 growth forecast to 1.5 percent, down from 3.5-4.0 percent previously, blaming the massive floods that are still affecting large areas of the country.

The flooding, triggered by months of unusually heavy rains, have killed more than 600 people and damaged the homes and livelihoods of millions around the country.

The waters also forced the closure of thousands of factories -- interrupting global supply chains, putting more than half a million people temporarily out of work and costing the economy billions of dollars.

The package is the latest government effort to revive an economy reeling from the impact of the March 11 earthquake and tsunami, which requires the nation's biggest post-World War II reconstruction effort.

The extra budget comes as a strong yen and turmoil from the eurozone debt crisis also continue to cloud the outlook for the world's third-largest economy, after the Bank of Japan last week warned of slowing growth.

The upper house gave widely expected approval to the budget in the wake of a four-trillion-yen package in May and another two trillion yen in July.

The more powerful lower house, controlled by Prime Minister Yoshihiko Noda's Democratic Party of Japan (DPJ), approved the budget on November 10.

The bulk of the third supplementary budget for the year to March is earmarked for rebuilding the northern region hit by the March earthquake and tsunami that left 20,000 people dead or missing.

Part of the budget will be used for decontamination and other measures to counter the worst nuclear crisis for 25 years after post-tsunami meltdowns at the Fukushima Daiichi plant.

The spending plan also includes two trillion yen in financing for struggling businesses amid the yen's appreciation to historic levels against the dollar.

It includes 500 billion yen in subsidies to companies that build factories and research facilities in Japan.

The government plans to fund the budget through bond issuance, spending cuts, sales of public assets, tax hikes and use of non-tax revenues.

The new reconstruction bonds will further pressure Japan's ballooning public debt, which stands at more than 200 percent of GDP.

However, lawmakers are hoping to quickly pass a related bill paving the way for tax hikes to help fund repayment.

The passage came after the DPJ struggled to compromise with opposition parties, which control the upper house, on extending the redemption period of of planned quake-relief government bonds to 25 years from an originally proposed 10.