A multi-reference CI scheme is proposed which is aiming at a considerable reduction of the generally very large number of configurations of CI expansions in multi-configuration reference cases. This reduction is achieved by combining the idea of internal contraction, the concept of pair natural orbitals (PNO's) and CEPA (coupled electron pair) type approximations for the contributions of higher than double excitations. This latter estimate leads to size consistent results and also permits to employ reference wavefunctions that contain only the dominantly occupied configurations of the considered system. Applications to two test cases, the lowest states (3P, 1D and 1S) of the carbon atom and the symmetry forbidden C2nu insertion reaction of Be and H-2, show that our method is able to truncate CI expansions to lengths of no more than 10(3)-10(4) without losing more than 1-2% of the correlation energy. The calculated excitation energies and energy barriers agree with the full CI results in the respective basis within about 1 kcal/mol. Thus the MC-CEPA-PNO method presents a very efficient way to obtain ''chemical accuracy'' in CI-calculations for molecular systems.