Jaguar Land Rover (JLR), is considering building a major new engine plant in the UK which could create more than 1,000 jobs, according to reports.

The luxury car maker has identified three locations to base the plant, Wolverhampton, South Wales and a site in India which has not been named.

Indian car maker Tata Motors, which owns JLR, is understood to be discussing the viability of the engine plant with an announcement to be possibly made within the next month.

JLR, which employs around 17,000 staff in the UK, last year unveiled plans to invest billions of pounds in its business, creating thousands of new jobs and safeguarding its UK factories.

A new engine plant will be a major boost for the Government, which has pinned its hopes on the private sector to drive the economic recovery in the UK.

The move would also be welcomed by the British car industry which has seen a renaissance during the past 20 years after a period of decline in the 1970s and 1980s.

The UK now produces 1.4 million vehicles a year, an increase of 20% compared with 2009, and builds more than two million engines, the Sunday Telegraph said.

More than three-quarters of the vehicles built in Britain are exported, with an annual export value of £5 billion a year in the past five years, according to the Department for Business Innovation and Skills.

JLR’s engines are currently supplied by Ford from plants including Bridgend and Dagenham in the UK.

Jaguar and Land Rover sales were up 13% in the first quarter of 2011, including a record-breaking March for Land Rover in the UK, and the company is on course to make an annual pre-tax profit of £1 billion for the year to March 31.