MG Rover has announced plans for a major alliance with a top Chinese firm.

Midlands-based Rover is in discussions with China Brilliance Holdings, with the talks possibly resulting in joint development of cars and the manufacture of a range of vehicles in both the UK and China.

The link could also see both companies using each other's engines and the setting up of a common parts supplier base.

The proposed agreement does not involve either company taking a financial stake in the other.

But if it is finalised, the alliance will be an important start in the series of collaborations that the motor industry believes Rover needs to survive.

A Rover spokesman said that the discussions related to "the formation of a wide-ranging strategic alliance and cooperation agreement".

He added: "Several meetings have taken place but as yet no formal decisions have been taken. Further announcements will be made in due course."

China Brilliance Holdings is part of the Brilliance Group which has controlling interests in several companies listed on the Shanghai, Hong Kong and New York stock exchanges.