JAPANESE car giant Honda today gave the British motor industry a huge boost by announcing plans for a major expansion of its operation in Britain, creating up to 1,000 new jobs.

Honda announced expansion of its factory in Swindon with a multi-million pound investment to build a new, small car alongside the Civic and Accord models.

The announcement comes just days after Rover confirmed it will build its new luxury car, the R40, at Cowley, creating a further 1,000 jobs.

Prime Minister Tony Blair said Honda's decision to launch a new hatchback at Swindon in 2002, expanding production from 150,000 to 250,000 vehicles, a year was "a tremendous vote of confidence in the UK".

Flanked by Honda president Nobuhiko Kawamoto, Mr Blair said: "It shows that Britain is still the number one place to come to for people who want to invest and get into the European markets."

The substantial investment showed the fundamentals of the British economy were strong and getting stronger, he claimed.

Mr Blair added: "The single most important thing in attracting the investment here has been the quality of the workforce we can offer," he said.

It is understood that Honda looked at other sites in Europe before deciding to expand the factory at Swindon.

Professor Garel Rhys, a leading motor industry analyst, said that production at Swindon could double to 300,000 as a result of the expansion.

He said: "This is a huge vote of confidence for the British motor industry, as well as the British economy."

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