Google aims to give away thousands of websites to small Canadian businesses to encourage them to establish an online presence, the search engine's Canadian head said on Tuesday.

Despite boasting the most plugged-in population in the world, Canada struggles when it comes to small businesses using the Internet to flag their products and increase sales, Chris O'Neill said in an interview on Tuesday.

The numbers jump off the page, he said. Two-plus million small businesses in this country and less than a million have a website.

Canadians spent an average of 43.5 hours a month online in the last months of 2010, far ahead of second-place South Koreans and almost double the global average, according to data from comScore, an online data measurement company.

The most likely reasons a Canadian business might ignore the Web are fears it is too costly or complicated, or is unnecessary. Yet one in five Google searches are for local content, O'Neill said.

It starts with us seeing an untapped opportunity for small businesses and entrepreneurs in Canada, he said, adding that Google hopes to give out 100,000 websites in Canada this year.

He declined to put a dollar figure on the offer, which includes a year of free hosting for websites with the country-specific .ca top-level domain.

It's not about managing the pennies on this one. It's about investing and seeing where it goes, he said.

Google makes most of its money by selling targeted advertising on its search portal.

Canadians interested in taking up the offer can visit to choose a domain name, upload information and photos and then publish.

(Reporting by Alastair Sharp; editing by Peter Galloway)