Grants of £300,000 have been paid to firms which used to supply MG Rover to prevent hundreds of job losses caused by the crisis.

A special task force set up to help workers at the Longbridge factory in Birmingham, as well as other supplier firms, said the payouts had prevented 700 redundancies.

The task force, meeting in Birmingham yesterday, decided to extend a package of training and other support to 750 workers at the Peugeot factory in Coventry who are losing their jobs because of cuts in production announced earlier this year by the French car group.

Nick Paul, chairman of the task force, said the grants had been given to 34 supplier companies and would last for six weeks.

Some firms which sold components to MG Rover have been laying off staff since the group went into administration, but it is hoped that the grants will stave off huge job losses at manufacturing firms across the country.

Meanwhile, the 5,000 Longbridge workers who will lose their jobs have started receiving their redundancy notices.

Workers expressed frustration that their redundancy notices did not give any details of how much money they will be paid.