We examine a string action consisting a of two-dimensional generally covariant field theory containing, besides the string position co-ordinates, conformal scalar fields. Its geometric interpretation as the world surface area traced out by the string can be maintained if the vacuum is associated with a nonflat higher-dimensional space. The quantized system is covariant in 26−r dimensions, wherer is the number of scalar fields. Further a nonzero background value for the scalar field, besides leading to a curved background, can also solve the tachyon ground-state problem.