The Swedish government has agreed to release funds to help its ailing national car-makers Volvo and Saab and safeguard jobs in the country.

It approved £2.1 billion in credit lines and emergency loans for both manufacturers yesterday but has no plans to exert control over either firm.

"The measures will be taken with the clear assumption that the state does not intend to acquire any of the existing automotive manufacturers," said a Swedish government statement.

Both Volvo and Saab have been put up for sale by their respective parent companies Ford and General Motors, which teeters on the brink of collapse after $14 billion rescue package was rejected in the US.

Sweden also pledged £250 million to set up a government-backed automotive research company aimed at developing green technologies for the future.

Will Powell