OTTAWA - The federal government is predicting a record surge in passport applications over the next year as Canadians get ready for tougher U.S. border rules.

Passport Canada is bracing for 5.2 million passport applications during the year ending March 31, 2009, a jump of 10 per cent over the previous year which itself was record-breaking, an internal document shows.

The projection is based on a revamped formula that now takes into account so-called "pulses," that is, changes in demand that are driven by significant events, such as the U.S. Western Hemisphere Travel Initiative or WHTI.

The initiative requires Canadians to present passports when travelling into the United States. Previously, Canadians could show birth certificates and other documents but as of January last year, the new passport rule kicked in for air travel.

Travellers by land and water will need passports as of June 1 next year, a requirement expected to drive Passport Canada applications to record levels because most Canadians travel to the United States by car.

The agency has been caught flat-footed in the past, with its faulty projections resulting in long lineups and waiting times - and panicky travellers.

The auditor general noted in a report last year, for example, that Passport Canada expected to issue just 3.8 million passports in 2008-2009, a number that now appears to have been off by more than a million.

In the year that ended March 31, 2008, the agency issued 4.8 million passports, a whopping 32 per cent increase from the year before.

Once the impact of Phase 2 of the WHTI passes, application levels are projected to drop significantly below five million for the following three years, says a June 2008 forecast obtained by The Canadian Press under the Access to Information Act.

Passport Canada hired 1,448 new workers in 2007-2008 to handle the crush and to help meet service standards of two weeks for a walk-in application and four weeks for a mail-in.

In the meantime, the agency has launched a $1.1-million summer ad campaign to encourage Canadians to send in their applications now to avoid the rush before the final phase of the WHTI.

Last August, the federal government eased rules for Canadians who renew passports but an agency spokesman said the change did little to reduce the workload.

"Passport Canada performs the same security checks, prints and issues a 24-page book to the applicant," said Fabien Lengelle. "In other words, our work stays pretty much the same."

A January survey of 4,000 Canadians found that one of every two people without a passport planned to apply for one over the following 12 months.

"Even if intentions are overstated . . . findings suggest there will still be millions of Canadians renewing and-or applying for a passport in the coming year," says the report by Ekos Research Associates, which conducted the survey for Passport Canada.

Finance Minister Jim Flaherty's budget this year announced plans for a higher-security electronic passport, with a 10-year expiry date, or double the current five-year passports.

The new document, in the works for several years, will look similar to the current blue booklet, but will be embedded with a tamper-resistant microchip holding personal information.

It's not clear how the new passport, scheduled to be issued in 2011, will affect workloads at Passport Canada in the short-term.

Passport applications must be accompanied by an $87 fee, though the auditor general recently questioned how part of the fee is set. Foreign Affairs agreed to review the figure this year.