The motor industry has been given a double boost with news of huge investments by two of the UK's biggest carmakers, safeguarding thousands of jobs.

Ford and Nissan will both receive Government support towards almost £2bn investment to develop new environmentally-friendly engines and a new electric car.

Business Secretary Lord Mandelson announced that the Government had agreed to back Ford's proposed £1.5bn investment over five years for development of a new generation of environmentally-friendly engines and vehicle technologies.

The Government will provide £360m in loan guarantees towards six projects through its Automotive Assistance Programme, backing a proposed loan of £450m which is being considered by the European Investment Bank.

Ford's plans will safeguard about 2,800 skilled jobs in the UK at its research and development centre at Dunton in Essex as well as its manufacturing plants in Dagenham, Essex, Southampton and Bridgend in South Wales.

It was also announced that Nissan will produce its electric car, the Leaf, at its plant in Sunderland.

Lord Mandelson said the Government is to commit £20.7m under the Grant for Business Investment scheme for both the production of the car and a new battery plant at Sunderland.

This will support total investment of more than £420m by Nissan in its UK operations.

Nissan has plans to make up to 50,000 vehicles and 60,000 batteries a year which will help to safeguard and create over 550 skilled jobs at the Sunderland plant.

Lord Mandelson said: "This investment is a fantastic vote of confidence in the Sunderland plant and its excellent workforce. The automotive sector is of key importance to the UK. It supports R&D, technological innovation, skills and a supply chain that's a mainstay of the wider manufacturing sector.