**UNITED
      STATES**




**SECURITIES
      AND EXCHANGE COMMISSION**




**Washington,
      D.C. 20549**




**FORM
      40-F**




(Check
      One)




o
            Registration
                statement pursuant to Section 12 of the Securities Exchange Act of
                1934


or


þ
            Annual
                report pursuant to Section 13(a) or 15(d) of the Securities Exchange
                Act
                of 1934




For
      fiscal year ended: **December
      31, 2006**  Commission
      File number: **000-49751**




**CATALYST
      PAPER CORPORATION**


(Exact
      name of Registrant as specified in its charter)





**Canada**
              *(Province
                or other jurisdiction of incorporation or
                organization)*
            **2621**
              *(Primary
                standard industrial classification code number, if
                applicable)*
            **98-0138030**
              *(I.R.S.
                employer identification number, if
                applicable)*





**16** **th** **Floor, 250 Howe Street, Vancouver,**


**British
      Columbia, Canada, V6C 3R8 (604) 654-4000**


*(Address
      and telephone number of Registrant’s principal executive office)*





**CT
      Corporation, 111 Eighth Avenue, New York, New York 10011 (212)
      894-8700**


*(Name,
      address and telephone number of agent for service in the United
      States)*





Securities
      registered or to be registered pursuant to Section 12(b) of the Act:  **N/A**





Title
      of
      each class: **N/A**     Name
      of
      each exchange on which registered: **N/A**





Securities
      registered or to be registered pursuant to Section 12(g) of the Act: **Common
      Shares**





Securities
      for which there is a reporting obligation pursuant to Section 15(d) of the
      Act: **N/A**





For
      annual reports, indicate by check mark the information filed with this
      form:


þ
            Annual
                Information Form
            þ
            Audited
                Annual Financial Statements





Indicate
      the number of outstanding shares of each of the issuer’s classes of capital or
      common stock as of the close of the period covered by the annual report: **214,604,120
      Common Shares**





Indicate
      by check mark whether the Registrant by filing the information contained in
      this
      Form is also thereby furnishing the information to the Commission pursuant
      to
      Rule 12g3-2(b) under the Securities Exchange Act of 1934 (the “Exchange Act”).
      If “Yes” is marked, indicate the file number assigned to the Registrant in
      connection with such Rule.


Yes
            o
            82-__________
            No
            þ





Indicate
      by check mark whether the Registrant (1) has filed all reports required to
      be
      filed by Section 13 or 15(d) of the Exchange Act during the preceeding 12 months
      (or for such shorter period that the Registrant was required to file such
      reports) and (2) has been subject to such filing requirements for the past
      90
      days.





Yes
            þ
            No
            o













**FORWARD-LOOKING
      INFORMATION**




All
      statements, other than statements of historical facts, included or incorporated
      by reference in this annual report on Form 40-F constitute “forward-looking
      statements” within the meaning of section 21E of the Exchange Act. Statements
      that address activities, events or developments that Catalyst Paper Corporation
      (the “ Registrant ”)
      expects or anticipates will or may occur in the future, including such things
      as
      future cost savings, performance improvements, synergies or capital expenditures
      (including the amount and nature thereof), product prices, business strategy
      and
      measures to implement strategy, competitive strengths, goals, expansion and
      growth of the Registrant’s businesses and operations, plans, references to
      future success and other such matters constitute forward-looking statements.
      When used herein, the words “estimate,” “project,” “anticipate,” “expect,”
“intend,” “believe” and similar expressions are intended to identify
      forward-looking statements. Whether actual future results and developments
      will
      conform with expectations and predictions is subject to a number of risks and
      uncertainties, including those considerations discussed in the “Management’s
      Discussion and Analysis - Risks and Uncertainties” section of the Registrant’s
      annual report for the fiscal year ended December 31, 2006. Important factors
      that could cause actual results to differ materially from those implied by
      the
      forward-looking statements include, but are not limited to, competition from
      other pulp and paper manufacturers, cyclical pricing and demand in markets
      for
      the Registrant’s products, requirements for additional capital expenditures, and
      availability of fibre supply.




Consequently,
      all of the forward-looking statements made herein are qualified by these
      cautionary statements and there can be no assurance that the actual results
      or
      developments anticipated by the Registrant will be realized. The Registrant
      undertakes no obligation to release publicly any revisions to any
      forward-looking statements to reflect events or circumstances after the date
      hereof or to reflect the occurrence of unanticipated events.




**CONTROLS
      AND PROCEDURES**




**A.**
            **Evaluation
                of Disclosure Controls and
                Procedures**




The
                Registrant conducted an evaluation under the supervision and with
                the
                participation of the Registrant’s management, including the chief
                executive officer and chief financial officer, as of December 31,
                2006,
                pursuant to Rule 13a-15 promulgated under the Securities Exchange
                Act of
                1934, as amended (the “Exchange
                Act”)
                of the effectiveness of the design and operation of the Registrant’s
                disclosure controls and procedures. Based on this evaluation, the
                Registrant’s chief executive officer and chief financial officer concluded
                that such disclosure controls and procedures are effective to ensure
                that
                information required to be disclosed by the Registrant in reports
                it files
                or submits under the Exchange Act is (a) recorded, processed, summarized
                and reported within the time periods specified in the rules and forms
                of
                the Securities and Exchange Commission (“SEC”)
                and (b) accumulated and communicated to the Registrant’s management
                including the Registrant’s chief executive officer and chief financial
                officer, or persons performing similar functions, as appropriate,
                to allow
                timely decisions regarding required disclosure. It should be noted
                that
                while the Registrant’s chief executive officer and chief financial officer
                believe that the Registrant’s disclosure controls and procedures provide a
                reasonable level of assurance that they are effective, they do not
                expect
                that the Registrant’s disclosure controls and procedures or internal
                control over financial reporting will prevent all errors and fraud.
                A
                control system, no matter how well conceived or operated, can provide
                only
                reasonable, not absolute, assurance that the objectives of the control
                system are met.




**B**.
            **Management’s
                Annual Report on Internal Control over Financial
                Reporting**




Management’s
                annual report on internal control over financial reporting is included
                in
                this Form 40-F on page 1of
                the Registrant’s audited consolidated financial statements filed as
                Exhibit 2 and is incorporated herein by reference.




**C.**
            **Attestation
                Reports of the Registered Public Accounting Firm**




The
      attestation report of the Registrant’s independent auditor are included in
      this Form 40-F on pages 2 and 3 of the
      Registrant’s audited consolidated financial statements filed as Exhibit 2 hereto
      and are incorporated herein by reference.




**D**.
            **Changes
                in Internal Controls**




There
                was no change in the Registrant’s internal control over financial
                reporting that occurred during the period covered by this report
                that has
                materially affected, or is reasonably likely to materially affect,
                its
                internal control over financial
                reporting.




**AUDIT
      COMMITTEE FINANCIAL EXPERT**




The
      Registrant’s board of directors has determined that it has at least one audit
      committee financial expert serving on its audit committee. Mr. Thomas Chambers
      has been
      determined to be audit committee financial expert for the purposes of applicable
      legislation. Mr. Chambers is independent as that term is defined for
      purposes of audit committee member independence under the corporate governance
      standards of the New York Stock Exchange.




**CODE
      OF ETHICS**




The
      Registrant has adopted a Code of Corporate Ethics and Behaviour that applies
      to
      all directors, officers and employees, including its principal executive
      officer, principal financial officer and principal accounting officer. The
      Code
      of Corporate Ethics and Behaviour sets out the standards of conduct that apply
      to each person’s performance of his or her duties and is designed so that the
      Registrant’s affairs are conducted fairly, honestly and in strict compliance
      with its legal obligations. The Code of Corporate Ethics and Behaviour is
      available at the Registrant’s website at www.catalystpaper.com.







**PRINCIPAL
      ACCOUNTANT FEES AND SERVICES**




External
      Auditor Service Fees in Canadian dollars (1) :




Year
                Ended December 31, 2006
            
            Year
                Ended December 31, 2005Audit
                Fees
            
            $
            1,094,000
            
            $
            594,200Audit
                Related Fees
            
            
            111,600
            
            
            188,600Tax
                Fees
            
            
            81,000
            
            
            139,900All
                Other Fees
            
            
            -
            
            
            -$
            1,286,600
            
            $
            922,700





(1)  The
      exchange rates at December 31, 2006 and 2005, based on the Bank of Canada noon
      spot rate were $1.165 and $1.166 (C$/US$), respectively.





The
      nature of each category of fee is described below:




Audit
      Fees




Includes
      services that are provided by the independent auditor in connection with
      statutory and regulatory filings, principally for the audit of the annual
      financial statements contained in the Form 40-F, Annual Information Form,
      Management Proxy Circular and offering memoranda.




Audit
      Related Fees




Includes
      assurance and related services provided by the independent auditor that are
      related to the performance of the audit, principally for general advice on
      accounting standards, the audit of the Registrant’s pension plan and the audit
      of a wholly owned subsidiary.




Tax
      Fees




Relates
      to tax compliance services provided by the independent auditor, including
      assistance with questions regarding tax audits.




The
      Audit
      Committee is responsible for pre-approving audit and non-audit services provided
      by the independent auditor. The Audit Committee has delegated to its Chairman
      the authority, to be exercised between regularly scheduled meetings of the
      Audit
      Committee, to pre-approve non-audit services provided by the independent auditor
      up to a maximum amount of CDN$100,000 in the aggregate. All such pre-approvals
      shall be reported by the Chairman at the next meeting of the Audit Committee
      following the pre-approval.




**OFF
      BALANCE SHEET ARRANGEMENTS**




The
      Registrant uses financial instruments to reduce its exposure to foreign currency
      and price risks associated with its revenues, costs and long-term debt. The
      Registrant considers these financial instruments important in terms of cash
      flow
      for their ability to hedge against changes in the U.S. dollar on which much
      of
      its revenues, the prices of its products and energy inputs are based. The
      Registrant also uses interest swaps to reduce its exposure to long-term interest
      rates associated with its senior notes.




At
      December 31, 2006, no commodity price hedging instruments were outstanding
      in
      respect of products sold. The following table highlights the Registrant’s
      foreign currency options and forward contracts outstanding to sell U.S. dollars
      at December 31, 2006:




***Options******Purchased
                Options***
            
            ***Sold
                Options***
            
            ***Forward
                Contracts****Term*
            
            *US$Millions*
            
            *Average
                Rate*
              *Cdn$
                / US$*
            
            *US$Millions*
            
            *Average
                Rate*
              *Cdn$
                / US$*
            
            *US$Millions*
            
            *Average
                Rate*
              *Cdn$
                / US$**As
                at December 31, 2006*0
                to 12 months
            
            
            
            
            $
            485
            
            
            1.1073
            
            $
            205
            
            
            1.1620
            
            $
            109
            
            
            1.145913
                to 24 months
            
            
            
            
            $
            34
            
            
            1.1133
            
            $
            32
            
            
            1.1238
            
            $
            -
            
            
            -*As
                at December 31, 2005*0
                to 12 months
            
            
            
            
            $
            450
            
            
            1.1930
            
            $
            232
            
            
            1.2899
            
            $
            60
            
            
            1.170513
                to 24 months
            
            
            
            
            $
            50
            
            
            1.1447
            
            $
            -
            
            
            -
            
            $
            -
            
            
            -









At
      period-end exchange rates, the net amount that the Registrant would pay to
      settle the above contracts and options is
      $ 38 million,
      of which $ 3.0 million is
      included in prepaids and other, and the remaining negative $6.8 million is
      not
      yet recorded in the financial statements.






At
      December 31, 2006, the Registrant’s long-term debt related forward foreign
      exchange contracts to acquire U.S. dollars totalled US$23 million over a
      five-year period, at rates averaging CDN$1.3486/US$. At period end exchange
      rates, the net amount the Registrant would pay to settle these contracts is
      $4.0
      million.






The
      Registrant also uses financial instruments to reduce the Registrant’s exposure
      to energy costs. At December 31, 2006, the Registrant had oil swaps to purchase
      30,000 barrels at an average contract rate of US$31.55 per barrel, settling
      between January 1, 2007 and March 31, 2007, and natural gas swaps to purchase
      1.3 million MMBTUs at an average contract rate of US$7.44 per MMBTU settling
      on
      October 31, 2007. At year-end rates, the net amount the Registrant would pay
      to
      settle these contracts is
      $ 0.6 million.






From
      time
      to time, the Registrant enters into interest rate swaps to manage the
      Registrant’s exposure to changes in long-term fixed interest rates associated
      with its senior notes. The Registrant entered into fixed-to-floating interest
      rate swaps on US$100 million, under which the Registrant will receive a fixed
      rate receipt of 7.375%, and pay a floating rate averaging U.S. six month LIBOR
      plus an average of 2.0%. The swaps mature March 1, 2014, although US$30 million
      are cancellable at the counterparties’ option between March 1, 2009 and March 1,
      2014, for premiums which mirror the call premiums on the Registrant’s 7.375%
      senior notes. At period end rates, the net amount the Registrant would receive
      to settle these contracts is $0.9 million.









**CONTRACTUAL
      OBLIGATIONS**




The
      following table presents the aggregate amount of future cash outflows of the
      Registrant’s contractual obligations as of December 31, 2006, excluding
      amounts due for interest on outstanding indebtedness:




Payments
                due by period
              *(In
                millions of Canadian dollars)***Contractual
                Obligations**
            
            Total
            
            Less
                than
              1
                Year
            
            1-3
              Years
            
            3-5
              Years
            
            More
                than
              5
                YearsLong-term
                debt
            
            $
            854.5
            
            $
            -
            
            $
            75.0
            
            $
            468.7
            
            $
            310.8Capital
                lease obligations
            
            
            5.4
            
            
            0.7
            
            
            1.4
            
            
            1.4
            
            
            1.9Operating
                leases
            
            
            91.9
            
            
            12.9
            
            
            21.5
            
            
            18.0
            
            
            39.5Other
                commitments
            
            
            8.5
            
            
            1.6
            
            
            3.2
            
            
            3.2
            
            
            0.5Total
            
            $
            960.3
            
            $
            15.2
            
            $
            101.1
            
            $
            491.3
            
            $
            352.7




**UNDERTAKING
      AND CONSENT TO SERVICE OF PROCESS**




**A.**
            **Undertaking**




The
                Registrant undertakes to make available, in person or by telephone,
                representatives to respond to inquiries made by the staff of the
                SEC, and
                to furnish promptly, when requested to do so by the SEC staff, information
                relating to: the securities registered pursuant to Form 40-F; the
                securities in relation to which the obligation to file an annual
                report on
                Form 40-F arises; or transactions in said
                securities.




**B.**
            **Consent
                to Service of Process**




The
                Registrant has previously filed a Form F-X in connection with the
                class of
                securities in relation to which the obligation to file this report
                arises.




**SIGNATURES**




Pursuant
      to the requirements of the Exchange Act, the Registrant certifies that it meets
      all of the requirements for filing on Form 40-F and has duly caused this annual
      report to be signed on its behalf by the undersigned, thereto duly
      authorized.




**CATALYST
      PAPER CORPORATION**




By:  *“Ralph
      Leverton”*




Name:  **Ralph
      Leverton**




Title:  Vice
      President, Finance




and
      Chief
      Financial Officer




Date:
      February 14, 2007

















**EXHIBIT
      INDEX**




**Exhibit
                No.**
            **Description**1
            Annual
                Information
                Form2
            Audited
                Consolidated Financial
                Statements of Catalyst Paper Corporation as at and for the year ended
                December 31, 20063
            Management’s
                Discussion and
                Analysis4
            Consent
                of KPMG LLP5
            Certification
                of Russell J. Horner,
                President and Chief Executive Officer, pursuant to Rule
                13a-14(a).6
            Certification
                of Ralph Leverton,
                Vice-President, Finance and Chief Financial Officer, pursuant to
                Rule
                13a-14(a).7
            Certification
                of Russell J. Horner,
                President and Chief Executive Officer, pursuant to Rule
                13a-14(b).8
            Certification
                of Ralph Leverton,
                Vice-President, Finance and Chief Financial Officer, pursuant to
                Rule
                13a-14(b).