General Motors' Australian unit Holden will develop at least two new car models for China after sealing a deal with GM's Chinese partner.

The deal with China came after Holden secured a A$275m (US$285m) funding package from the Australian government, which is determined to keep the industry afloat and protect manufacturing jobs, Reuters reported.

Together with the government funding, GM also pledged A$1 billion investment in Holden.

Holden signed the agreement with Shanghai General Motors (SGM) and the Pan Asia Technical Automotive Centre, a joint venture between GM and Shanghai Automotive Industry Corp, on Monday, to develop at least two new models for SGM and its affiliates in China, the news agency said.

The new models will be designed at Holden's technical centre, based in Port Melbourne, and built in China.