The government is considering proposals to offer government guarantees to banks lending money to car companies on a short-term basis.

Lord Mandelson, business secretary, is also expected to allow manufacturers access to a Bank of England scheme for banks which would help them raise cash to offer as finance to would-be buyers, reported Daily Telegraph.

Following initial talks in November, manufacturers have now been invited to a second government summit to discuss the crisis.

Carmakers have repeatedly asked for government help in recent months.