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Ministers are discussing a £667m loans package to help Jaguar and the UK motor industry, a Labour peer has claimed.

Prime Minister Gordon Brown had said on Friday there was "no promise of support" for the car maker, despite action to shore up the US motor sector.

But manufacturing expert Lord Bhattacharyya told the Financial Times he expected the government to arrange the loans "fairly soon".

Unions say tens of thousands of jobs are at risk without government help.

Lord Bhattacharyya, who is said to be close to both Mr Brown and Ratan Tata, chairman of Jaguar Land Rover's owner the Tata group, said Britain should follow America's lead.

President George W Bush agreed to lend $17.4bn over three months to keep General Motors and Chrysler afloat, saying that allowing the firms to fail would not be "a responsible course of action".

It is simply no good bailing out the banks if the banks won't then bail out business Derek Simpson Unite

And Lord Bhattacharyya said: "If the government fails to act to help the car industry, the UK will be the only major country not to safeguard its vehicle sector."

However, he said he understood the government was already discussing the loan package, along with an unspecified amount of support for other car companies.

The peer is head of Warwick Manufacturing Group research organisation.

He said Jaguar Land Rover was a "special case" in that it conducted almost all its research in Britain - employing 2,500 of its 15,000 UK workforce in that field.

Confederation of British Industry director-general Richard Lambert said taxpayers could afford to provide short-term loans

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