The Government is seeking urgent talks with General Motors after the car giant's dramatic decision to scrap plans to sell Vauxhall, a move welcomed by union leaders.

The GM board decided after a six-hour meeting in the United States not to go ahead with plans to sell its Opel and Vauxhall brands to Canadian car parts firm Magna - a deal which had threatened thousands of jobs across Europe.

President and chief executive Fritz Henderson said the decision to keep Vauxhall followed a more benign business environment in Europe and GM's improved financial health.

The decision will impact on 5,500 workers employed by Vauxhall in the UK, mainly at Ellesmere Port and Luton.

Workers arriving at the plants expressed "cautious optimism" that the U-turn would be better for the long-term security of their jobs.

Business Secretary Lord Mandelson said: "I am keen for very early discussions with GM over their plans for the business and how they will affect British plants and workers.

"I have always said that if the right long-term sustainable solution is identified, then the Government would be willing to support this."

Tony Woodley, joint leader of the Unite union, and a former Vauxhall worker himself, said the move was a "fantastic decision", adding: "There's no logic in breaking up the company. I believe it is the right decision in spite of a good deal that we'd struck with Magna.

"It is the best decision for Britain and our plants. I am absolutely delighted that General Motors have finally done the right thing for them and for us."

Unions struck a deal weeks ago with Magna which would have led to hundreds of voluntary redundancies. Despite announcing the sale to Magna, the deal was never signed although it was due to be finalised in the coming days.