SHANGHAI (Reuters) - Tesla's best-selling Model Y was included in a list of electric and plug-in hybrid models that a local government in China can purchase as a service car, according to the official Chinese media outlet the Paper on Thursday.

It was the first time Tesla's cars have been made eligible for government purchases in China, the Paper added.

China's eastern Jiangsu provincial government published 56 batches of new energy vehicle procurements for use as service cars by party, government and public organisations in a government statement on June 6.

Apart from the Model Y made in Tesla's Shanghai factory and Volvo Cars' XC40, the other 54 batches were all Chinese-branded EVs and hybrids. Volvo Cars is owned by Chinese automaker Zhejiang Geely Holding Group.

Neither the government nor the Chinese media specified the number of Model Y cars that the Jiangsu provincial government could buy.

Tesla's cars were banned from entering some government and military compounds in China.

The restrictions were removed after it won an endorsement from the country's top auto industry association that said in April the data collection by Tesla fleets in China was compliant.

As demand for Chinese cars abroad is overshadowed by the prospect of tariffs and domestic competition intensifies, Tesla's deliveries of China-made vehicles fell 9% in the first half compared to the same time in 2023.

Tesla CEO Elon Musk's trip to China in late April to meet Premier Li Qiang, however, appears to have paid off.

China has increased its support for Tesla, which plans to build a data training centre and roll out its Full Self Driving software in the country this year, despite ongoing tensions with the United States over tech rivalry.

(Reporting by Zhang Yan and Casey Hall; editing by Barbara Lewis)