After weeks of speculation, Toyota has confirmed it will begin production of its first European-built full hybrid car in Britain in mid-2010.

The announcement the new petrol-electric variant of the Auris hatchback will be built at Burnaston, near Derby, gives a boost to Britain’s hopes of becoming a leading player in low carbon industry, the Government said. Engines for the new car will be built at Toyota’s factory on Deeside, North Wales.

“Toyota has taken a significant step forward in ensuring that full hybrids become more accessible to a wider range of customers,” Tadashi Arashima, chief executive and president of Toyota Manufacturing Europe (TME), said.

“Such efforts are crucial if we are to see more low-carbon vehicles on European roads. Our decision to produce a full hybrid in the UK reflects both our confidence in the quality and commitment of the TMUK (Toyota Manufacturing UK) workforce and the strength of our long-standing partnership with the UK Government. The announcement is positive for Toyota, our UK suppliers and the local communities here.”

Business secretary Lord Mandelson said: ‘This is a welcome and forward-looking investment in Britain from a world class manufacturer. As part of our low carbon industrial strategy we set out to make Britain the best place in the world to develop low carbon vehicles.

“These commitments, backed by the formidable skills of the UK automotive workers enable companies like Toyota to invest with confidence in low carbon car production in the UK. It demonstrates the UK’s car industry is already making the low carbon transition.”

More than 370,000 units of the Auris have been sold in Europe since spring 2007. Under the new Toyota Optimal Drive technology, the car now comes equipped with a 1.33-litre dual VVT-i engine and Toyota’s Start&Stop technology, reducing CO2 emissions by 17 per cent (135 g/km) and improving fuel consumption by 19 per cent (48.7 mpg combined cycle).

TMUK started production at Burnaston in 1992 as Toyota’s first manufacturing company in Europe and today employs around 4,100 workers. The plant has produced over 2.5 million vehicles to-date, including the Carina E, Corolla, Avensis and Auris, for sale in Europe and export overseas.

TMUK represents a total investment of over £1.85 billion and is one of nine Toyota manufacturing companies in Europe. Toyota builds most of its hybrid vehicles in Japan, but also produces a small number of Prius cars in China and the Camry hybrid in the US.

Meanwhile, it has emerged MG Rover had been planning to build a hybrid-powered car at Longbridge to compete with the likes of the Toyota Prius shortly before it went bust in 2005.

The car was to have been based on the Rover 25 and would have combined a high-efficiency version of the K-Series 1.4 litre engine and twin 7.5kw direct-drive brushless DC electric motors powered by a nickel-metal battery.

“Throughout 2003 and 2004 had a significant electric/hybrid vehicle development programme underway and it is probably true to say that at that time they were further advanced than any UK manufacturer,” said a spokesman for MG Rover’s former owners.