A row has broken out in Australia over whether or not federal and state government funding was necessary for Toyota's decision to build the Camry hybrid locally.

Toyota Australia said it was, and on Wednesday issued a statement saying: "The governments' critical support and strong desire to introduce new environmentally friendly technology and promote increased innovation within the Australian automotive industry, enabled Toyota Australia to develop a case for a locally built hybrid Camry.

"Toyota's decision to build a hybrid Camry in Australia was based on various business considerations; however the Government's support was a critical factor in securing local production."

Earlier, federal opposition leader Brendan Nelson called on prime minister Kevin Rudd to explain the details of the A$35m funding announcement for the manufacture of the new car at Toyota's plant in Altona, west of Melbourne.

The Australian Associated Press (AAP) noted that Rudd on Tuesday announced the government would give Toyota A$35m from its $500m green car innovation fund to upgrade its production line in anticipation of 10,000 hybrid Camrys rolling out from 2010. The Victorian government has also pledged $35m to the project.

However, News Ltd's The Australian newspaper has reported Toyota planned to build the hybrid in Australia regardless of the government funding, the AAP report said.

"It's very important for Rudd to tell us how are you spending our money, what are you going to spend this money on, because otherwise it looks like a $35m photo opportunity," Nelson told AAP in Sydney.

Nelson reportedly said Rudd was trying to distract Australians from the high petrol price while failing to explain that the new Camry would account for only about 1% of the new vehicles going onto Australian roads. Motorists needed to be better educated about hybrids and offered competitive prices, he said, according to AAP.

Toyota Australia spokesman Mike Breen had told The Australian newspaper that the subsidy only served to bring the announcement forward.

"It would have happened regardless and we wouldn't bring it to market unless we're going to make money," Breen was quoted as saying.

Speaking in Tokyo, Rudd claimed Toyota had made it clear that a government subsidy was critical in swinging the deal to build a hybrid Camry in Australia, AAP said.

Website businessspectator.com.au said local papers The Age and The Australian took entirely different perspectives of the Toyota hybrid announcement but said The Age's view "is the one that makes sense" in view of the Toyota Australia statement.

"Philip King and Matthew Franklin claim in The Australian that Toyota was going to build the hybrid car in Altona anyway and the federal and state governments combined support of $70m made no real difference - all it did was bring the announcement forward. They claim that the $70m was a gift and a waste of taxpayer's money.

"Ian Porter and David Rood in The Age have a totally different version of the events. Porter says that Toyota in Australia certainly had a plan to make the hybrid car in Australia but they had lost out to Thailand.

"Porter says: 'Toyota had made the decision to base Camry hybrid production in Thailand last December about the time the Rudd Government came into office.'

"The Age now looks to be correct - it seems it was only the intervention of [Rudd], Victorian premier John Brumby and industry minister Kim Carr that rescued what was a plan that was going to be trumped. 'It was the equivalent to kicking a goal after the siren to win the game,' Porter says."

Reports from Australia earlier this year had suggested Thailand had got the nod to build the Camry hybrid over Australia but that Toyota Australia had been lobbying hard for the go-ahead.

Executives at rival General Motors unit Holden have suggested local hybrid production could begin around 2010 but Toyota is first to confirm Australian assembly of such vehicles.