General Motors of Canada on Friday said it had signed an agreement with the Quebec government aimed at increasing to $C1.2 billion ($US811 million) from $C800 million the supply contracts it gives in Quebec, Reuters reported.

Reuters said that GM's decision follows months of negotiations with public officials after the closure last year of the company's Camaro and Firebird plant in Ste-Therese, the only car plant that was left in the province.

GM also agreed to give $C10 million in the next five years to university research programmes on lightweight materials applications, Reuters added.

In return, Reuters said, the Quebec government pledged $C280 million in financial aid to suppliers and another $C10 million for research on lightweight materials. Quebec also said it would press other carmakers to increase their business with Quebec-based suppliers by $C400 million, the report added.

"Cumulatively, these efforts could increase the annual purchases of parts and sub-systems from $C1.6 billion to $C2.4 billion," Deputy Premier Pauline Marois said in a release, Reuters said.

Reuters noted that the agreement also calls for the birth of another acronym, the QAP, which stands for Quebec Auto Partnership. This venture, formed under the umbrella of the Societe generale de Financement, a government economic development agency, will be responsible for co-ordinating all the investments projects and helping Quebec suppliers to get access to government aid.