Tata has agreed to inject "tens of millions" of pounds into Jaguar Land Rover to prevent an immediate cash flow crisis while the UK government continues to consider the case for a taxpayer-funded bailout.

The Financial Times (FT) on Monday said the cash injection had given ministers time to respond to demands for multi-billion-pound loan guarantees from the car sector. It said chancellor [finance minister] Alistair Darling, chancellor, was understood to be concerned that any state support did not set too generous a precedent for other sectors.

A spokeswoman for the Department of Business, Enterprise and Regulatory Reform told just-auto that the report [and another in The Times] was speculation and would not comment.

She said business secretary Lord Mandelson had confirmed he had been in talks with Tata and JLR. She would not say if talks were taking place with other car makers, saying only the department "talks across the whole industry, we talk to all companies".

Another spokesman earlier told Reuters: "The government stands ready to help companies in the current difficult economic circumstances but does not have an open cheque book.

"The government has been in regular contact with Tata over Jaguar."

The FT said Mandelson was considering whether Jaguar Land Rover still needed government backing to get through the recession or whether Tata could be called on for further cash support.

The paper said it understood ministers had appointed KPMG and NM Rothschild to advise them on the Indian group's complex finances and to assess demands from the car sector.

A government insider told the paper: "They [Tata] have managed to solve the immediate difficulties so maybe they can resolve some others as well."

Mandelson is understood to be sympathetic to the argument that Jaguar Land Rover could be an exception to his "no open cheque-book" rule for distressed companies, not least because of its heavy research and development investment in the UK, the FT added, noting that the company, with 15,000 employees in Britain, was also seen as a vital contributor to the West Midlands regional economy.

That economy lost around 6,500 direct jobs alone in 2005 when MG Rover went into administration. The company was subsequently liquidated and the bones sold to China's Nanjing, which now employs only a couple of hundred assembling MG sportscars on a leased segment of former MG Rover complex, the rest of which has been demolished and turned into a business park. 

But Mandelson reiterated at the weekend that the state had to be a "lender of last resort" only after Tata had looked to its own resources. Any state support to Jaguar Land Rover would be conditional on the due diligence on the Indian parent being conducted by the government's City advisers, officials told the FT.

People close to Tata told the paper the emergency aid to Jaguar Land Rover came on top of "hundreds of millions" of working capital it had provided since it bought the car maker for US$2.3bn from Ford in March.

Tata is understood to be adamant that its support for its UK car subsidiary does not negate its argument that the government should provide bridging loans and credit guarantees to the company and the British car sector as a whole, the FT said.

UK carmakers insist they are being put at a competitive disadvantage by the UK's reluctance to act, in contrast to the bail-outs being offered by the US and continental European governments.

The US announced aid for GM and Chrysler on Friday and Canada followed up with a package for their local subsidiaries on Saturday.

The Times, meanwhile said, the planned UK government bailout had helped Tata secure the last-minute funding.

The report said prime minister Gordon Brown had decided to intervene to prevent the collapse of the car maker and was preparing to announce a short-term bailout package on Monday or Tuesday. But a combination of tough rhetoric in public and private reassurance appears to have helped the Tata Group to secure enough cash to postpone the bailout until after Christmas.

A state package worth hundreds of millions of pounds would be negotiated in the new year, The Times added.