Deforestation in the Amazon rainforest fell by 20% between August 2006 and July 2007, according to interim figures released by the Brazilian government.
It is the third year in a row that there has been a fall.
Brazil's President Luiz Inacio Lula da Silva said the new figures were good, but felt Brazil could have done more.
Environmental groups said the government is celebrating a past achievement when it knows the rate of deforestation is on the increase again.
While the Brazilian government views the fall in deforestation as encouraging news, there is a general recognition that protecting the Amazon is an enormous challenge.
Initial figures show that between August 2006 and July 2007, just over 11,000 sq km (4,250 sq m) of forest was destroyed, equivalent to the size of the island of Jamaica.
The estimate was based on 90% of the satellite images available for that period and the final result will be available early next year.
Deforestation has now fallen for the last three years, but this is a reduction from the near record levels reached in 2004.
Earlier this week, a report from the environmental group the Worldwide Fund for Nature warned that a combination of climate change and deforestation could destroy or severely damage 55% of the Amazon rainforest by 2030.
And another environmental organisation - Greenpeace - says the government is celebrating an achievement from the past and that more recent satellite images suggest deforestation is starting to rise again.
Some analysts had already warned that recent falls in deforestation could be explained by a drop in market prices for products such as soya and meat and that once these rose again, land clearance would start to increase.
The government says measures it has taken, such as creating conservation areas and increasing land inspections, have also made a difference.
There seems little doubt that the next year will be a major test of whether the right strategy is in place to protect the Amazon rainforest. ( BBC )