SYDNEY (Reuters Life!) - Luxury goods may have lost their luster for many people due to the recession, but in Australia, some pets are still living the good life.

Online luxury pet store Pets Palace (www.petspalace.com.au) was launched eight weeks ago as the economy was taking a battering from the global credit crisis and unemployment rose.

And, according to its managers, business is booming.

Marketing director Diana Costa is reluctant to give out sales figures, but says the site started out with one order every two days and now fill outs at least 15 orders a day.

"We've been inundated. People are looking for ways to make themselves feel good that doesn't cost very much and our items don't cost a lot," Costa told Reuters.

"Australians love their animals, they're becoming more a part the of the family so I think that's why they don't mind spending on their pets during this time."

Catering mainly to cats and dogs, Pets Palace offers products such as designer day and party wear, jewelry and accessories, furniture, bowls and toys as well as gourmet foods and drinks.

Prices range from nearly A$70 ($54) for plush dog beds in a range of colors and fabrics, to A$13 for cat wipes and A$6 for dog socks with non-slip soles. There is also a pink camouflage dog flotation vest for A$80 and canvas sneakers for A$30.

Star products include sparkling mineral water for dogs, bottled in handmade crystal containers and costing A$10 each. For pooches who don't like bubbles, there's a still version in a variety of colors that "make a statement in the water bowl."

"Pets really are one of the family. We treat them and spoil them. It's just as much fun to put a dog in a cute sweatshirt as it is a child," Costa, who has four dogs, says on the site.

Costa was inspired to set up the site after deciding to clean up her dog's cupboards of some A$2,000 worth of clothes. She offered the items online and sold out quickly.

"We'll get an order for a pair of socks and then we'll get an order for a Paris Hilton carry-me Chihuahua bag," she said, referring to the celebrity heiress who is often seen carrying her pet in a handbag.

"We actually thought the biggest market would be people without children and the baby boomers because they're empty nesters but that's not the case," said Costa. "We have received inquiries from 8-year-olds too."

According to PetNet, a website promoting responsible pet ownership, Australia has one of the highest number of pet owners in the world. Some 80 percent of Australians currently keep a pet or have had a pet at some stage in their life.

Last year, as Australia's economy was slowing down, animal welfare agency the RSPCA said hundreds of people were abandoning their pets, often because they could no longer afford them.

By Pauline Askin

(Editing by Miral Fahmy)