Bromsgrove MP Julie Kirkbride has told the Commons there is speculation that "secret talks" have been taking place between ministers and the owners of Jaguar Land Rover about financial support.
The Government has been urged to offer a US-style bail-out for the beleaguered British car industry. Trade Minister Ian Pearson refused to comment on the Tory MP's comments about secret talks with motor manufacturers about an emergency funding deal but acknowledged the automotive industry was "extremely important" to the UK.
Liberal Democrat business spokesman John Thurso said US president-elect Barack Obama had decided the American car industry was "too large to fail" and asked whether British ministers would consider a similar deal.
The US House of Representatives on Thursday approved a £9.4bn package for the American car giants Chrysler, General Motors and Ford, although the measure is likely to face stiff opposition in the Senate.
Ms Kirkbride also asked whether the severe difficulties faced by Vauxhall's US parent company General Motors meant they too were in talks with the Government.
Mr Pearson said: "I don't want to speculate on talks that the Government may or may not have been having with a range of automotive companies. What I do want to say clearly to the House, however, is that the automotive sector is extremely important to the UK."
He added: "I am determined we do everything we can to help viable businesses during what are exceptional times at the moment.
"The sort of circumstances we find ourselves in, I think they are circumstances we haven't seen for more than a generation. "
