The beleagured automotive industry has been thrown a lifeline after the Chancellor admitted he was considering a request for a financial bail-out.

The Society of Motor Manufacturers (SMMT) has asked the Government to make loans available to car manufacturers to compensate for the refusal of banks to offer short-term credit during the recession.

Jaguar Land Rover, which employs 17,000 in Birmingham, Solihull and Liverpool, is believed to be among manufacturers asking for credit to be made available.

The SMMT asked the Government to consider making credit available when representatives met Business Secretary Lord Mandelson late mast month. Jaguar will not comment on reports that it has asked for loans, but points out that it is represented by the SMMT.

If credit was made available, it would probably be to help businesses deal with immediate cashflow problems which would be dealt with by bank loans in normal circumstances.

Speaking in Westminster, Mr Darling said the Government was prepared to consider requests for help, but warned that there were important differences between helping the manufacturing sector and supporting banks, which have benefitted form a £500 billion rescue plan.

He said: “There is a distinction between the banking system and general support.”

It had been necessary to support the banking system because it is “central to everything we do”, Mr Darling said.

Asked if he would support carmakers, he said: “In relation to companies in general, through mostly the Department of Business and Enterprise, and also other arms of Government, we do offer support for investment.

“In relation to other requests we receive, we will judge them on their merits.

“But the main support we can actually give is the support we give the economy generally. Cutting VAT affects the price of cars, for example.”

Conservative leader David Cameron met Andrew McCall, Government Affairs Director with Jaguar Land Rover, and other senior figures from businesses such as Toyota and Airbus, as well as Staffordshire-based firm JCB.

Other senior Tories taking part in the meeting included shadow chancellor George Osborne and shadow business minister Mark Prisk.

Mr Prisk said Conservatives believed the government should look seriously at offering support, but stressed that no business had asked for a “hand-out”.

He said: “There are two principles that we feel are important. One is that we should be looking at providing support in the form of loans, and not in terms of grants.

“It has to be a business that is viable, and that risk assessment has to be taken commercially.”

The Government also had to ensure foreign firms such as Tata, the Indian business which owns Jaguar Land Rover, were committed to the long-term future of their subsidiaries before it could consider making funding available, he said.

“Where there is a foreign owner, we have to make sure that there is a long term commitment from that owner to the viability of that business in the longer term.”

“Those are important principles on which we would want to judge any support for an individual business.”

A spokeswoman for the Society of Motor Manufacturers and Traders said it was still waiting for a response from the Government.