Firms which used to supply MG Rover are starting to lay off workers in increasing numbers following the collapse of the car giant, threatening fresh job losses sparked by the crisis.

Manufacturing officials said about 1,200 workers were facing redundancy in firms across the West Midlands as well as the 5,000 who have lost their jobs at Longbridge in Birmingham.

The Engineering Employers Federation said a number of firms were being forced to announce "fairly sizeable" redundancies after Rover went into administration.

Supplier firms were owed at least two months money from MG Rover, it is believed.

RDS Automotive in Tipton said up to 90 jobs could be lost over the next month because of the crisis.

Peter Clews, of the Transport and General Workers Union, said: "Our members' greatest fear is that the company will go into administration leaving no redundancy pay.

"We are fighting hard to secure jobs, access training and ensure workers rights are protected in an attempt to minimise the fallout." Meanwhile, the dealership sub-group of the Rover task force met for the first time yesterday under the chairmanship of CBI director general Sir Digby Jones.

"The issue of the dealerships' future viability is in many ways the most wideranging to emerge from the MG Rover collapse," he said.

"It impacts on the jobs of about 8,000 people around the country, more than were employed at Longbridge itself. Most of these employees are highly skilled and some 2,000 are trainees, with approximately 500 in the Government's apprenticeship scheme.

"We identified the need for a new warranty arrangement to give consumers the confidence to buy existing MG Rover stock, and a need to find a secure future for the many trainees within these businesses.

"Clarity is also urgently required on the complex financing arrangements in place between MG Rover and the dealerships for the purchase of sales stock.

"Too many smaller dealers will go under if stability is not brought to this situation in a matter of days."