The British government has said negotiations with Jaguar Land Rover (JLR) on guaranteeing financing are continuing despite reports that the talks were in trouble.

The Department of Business, Enterprise and Regulatory Reform (BERR) last night told Reuters the government was in confidential discussions with JLR and parent company Tata Motors on both short- and long-term financing.

"Negotiations are continuing," the department said in a statement. "Any government financial assistance must, of course, protect taxpayers' money. But on this basis we are prepared to help, although not on any terms." BERR added that the "primary financing responsibility" for Jaguar Land Rover lies with Tata.

"We have been actively encouraging them for the last six months to put together a long-term funding package. In parallel, we have been talking to banks on their behalf, have appointed financial advisers to assist and we are prepared to guarantee loans from the European Investment Bank on the right terms."

TV news broadcasts had last night said financial aid from the European Investment Bank (EIB) was in jeopardy after a dispute over the terms of the loan.

Quoting industry experts close to the talks, the BBC said JLR would not accept the tough conditions imposed by the British government in return for guaranteeing the loan, including the right to veto management decisions.

JLR has four UK plants employing 14,000. The UK auto industry lost 6,000 jobs when MG Rover collapsed in 2005, 800 posts at vanmaker LDV were apparently saved only yesterday when Malaysian partner Weststar bought the company from GAZ Group and unions are worried that a Fiat takeover of Opel could lead to job losses at the UK Vauxhall unit. There have been suggestions JLR could collapse if a loan deal cannot be agreed.

The talks centre on a GBP340m (US$513m) approved loan from the EIB, to be used for development of environmental technologies, and a GBP400m government loan.

Sky News said it was "crunch time" for JLR after six months of discussions. Sources told the broadcaster the government wanted 15% commission to guarantee the loan, something the government had not confirmed.

Sky sources also said the government wanted to impose a new chairman or board member who would offer transparent control to protect UK taxpayers' interest.

A government source told Sky suggestions the talks were close to collapse were wrong and insisted the government wanted JLR to "succeed", especially due to its strong environmental policies.

The source added that rumours over a rejection of the deal amount to "tactical positioning by the Tata group" and negotiations are ongoing.

But Howard Wheeldon, a senior strategist at the brokerage BGC Partners, told Sky's Jeff Randall Live programme last night the government deal was "totally unacceptable".

"The government has said it's only prepared to guarantee GBP175m of these loans and worse it wants to take 15% off as a charge, immediately payable by Tata to the government.

"Esssentially the British government is putting nothing into this so what's the charge for?"

"The government also wants to take a much more leading control in the future of Jaguar Land Rover such as the appointment of a chairman, day-to-day decisions, investment decisions.

"It wants a permanant seat on the board. That is my understanding. Again this would be acceptable if it was putting up a lot its own money, but it isn't."

A JLR spokesman told Sky: "We always said discussions would be complex. The process of negotiation is under way and we are making progress. We expect to stand by our agreement with the unions that there will be no compulsory redundancies for two years. All of our three plants are currently working on a four day week."