Workers losing their jobs following the collapse of MG Rover will be able to hand back cars they bought from the company and have loans written off, it was announced yesterday.

Many of the former employees had taken out finance to buy an MG Rover and faced debts of thousands of pounds after the company went into administration.

Chancellor Gordon Brown, during a visit to the West Midlands, said an agreement had been reached with banks over the loans, which had been due for repayment.

The Rover Task Force said workers had faced "real additional hardship" over the loans.

It said that working with the Treasury and administrators to MG Rover it had been agreed that workers can either hand back the cars and have loans written off or keep the vehicle and agree a new loan for a lower amount which would reflect the current value of the car.

Mr Brown said: "I welcome the agreement reached with the banks in relation to car loans which I know has been of great concern to many Rover workers."

Mr Brown saw a new programme being put in place to help 87 apprentices who had been training for jobs at MG Rover and who are now being retrained for other work.

Efforts are being made to place the young workers in apprenticeships with other local manufacturing firms.

Mr Brown said: "We will continue to do everything we can to help the staff, families and suppliers affected by the collapse of Rover, including the young apprentices.

"Even amid the deep disappointment of what has happened at Rover we will make sure that every worker affected is given the support, skills and opportunities to find new employment and we will ensure that in the meantime they are supported financially."

Rover Task Force chairman Nick Paul said: "The announcement will reassure former MG Rover apprentices that they can get the support they need to continue their training."