The Indian owner of West Midlands-based Jaguar Land Rover (JLR) has agreed to pump "tens of millions" of pounds into the luxury car brand to prevent a cashflow crisis.
The additional cash from Tata Motors, which bought JLR earlier this year, has bought Government ministers breathing space as they consider whether to provide state support for the ailing manufacturer.
Tata was said to be adamant its support for its UK subsidiary did not negate its argument the Government should provide bridging loans and credit guarantees to help the company and the car sector as a whole through the current financial difficulties.
Following the US government's announcement of a 17.4 billion dollar (£11.7 billion) loan for American car-makers last week, Business Secretary Lord Mandelson has come under pressure to come up with a similar package for UK manufacturers.
Unconfirmed reports suggest ministers are preparing for a bail-out involving hundreds of millions of pounds, possibly in the New Year. But Lord Mandelson said JLR will have to pass "tough tests" before it gets any help from the Government.
Playing down the prospect of a quick bail-out for the British car industry, the Business Secretary said the firm's owners first had to "look to themselves".
Government officials are keeping in close contact with JLR as union leaders warn tens of thousands of jobs could be lost without immediate support for the car industry.
The Financial Times quoted an unnamed "Government insider" as saying: "They (Tata) have managed to solve the immediate difficulties, so maybe they can resolve some others as well."
A spokesman for Lord Mandelson's Department for Business, Enterprise and Regulatory Reform said: "The Government doesn't have an open cheque-book to bail out ailing companies, but we are doing all we can to help businesses overcome the current challenges.
"Jaguar Land Rover have owners who are well resourced and have the first responsibility to sustain the companies they own."