The row over the taking of farm land for a new Tata Nano plant and adjacent supplier park was said to be largely settled - at least for now - on Sunday but no Tata or contractor workers entered the factory in Singur, an hour's drive from Kolkata, on Monday morning and the automaker - eventually - said construction and commissioning work would remain halted.

In any event, the text of an agreement mediated by West Bengal governor Gopalkrishna Gandhi between his government and the Trinamool Congress-backed farmer agitators after the talks on Sunday called for a temporary halt on the supplier park.

"The government has taken the decision to respond to the demand of those farmers who have not received compensation, by means of land to be provided to the maximum within the project area and the rest in adjacent areas as early as possible," it said.

"Towards this, a committee will be constituted to ascertain the scope and settle the modalities within a period of one week.

"During this time, the government will urge the vendors [in the supplier park] not to make any construction. [Trinamool chief] Mamata Banerjee is making an announcement regarding the suspension of the agitation from Singur.

Banerjee subsequently called off her 15-day-long siege of the plant which has seen workers attacked, intimidated into not showing up for work and even foreign workers heading home.

"The government and those who have been agitating on behalf of the farmers will cooperate with each other for the benefit of the industry, agriculture and ancillaries," the agreement added.

A Tata Motors spokesperson initially refused to comment on whether work at the factory slated to make the Nano would resume on Monday.

Later in the day, the company issued a statement which said: "Tata Motors is distressed at the limited clarity on the outcome of the discussions between the West Bengal state government and the representatives of the agitators in Singur. In view of the same, Tata Motors is obliged to continue the suspension of construction and commissioning work at the Nano Plant.

We will review our stated position only if we are satisfied that the viability of the project is not being impinged, the integral nature of the mother plant and our ancillary units are being maintained and all stakeholders are committed to develop a long term congenial environment for smooth operations of the plant in Singur."

Tata Motors, last week suspended indefinitely work on the factory for the world's cheapest car priced at INR100,000 (US$2,500) and said it was evaluating alternate options for manufacturing the tiny car at other company facilities, as well as preparing a detailed plan to relocate the plant and machinery to an alternate site.

"To minimise the impact this may have on the recently recruited and trained people from West Bengal, the company is exploring the possibility of absorbing them at its other plant locations," Tata said.

"Tata Motors can now go ahead with its work at the plant," senior Trinamool Congress official Kalyan Banerjee told local media on Sunday after three days of tough talks. The plant in Singur is 90% complete, local reports added, noting that Tata had already sunk US$350m into it.

Protests have been going on for two years against the plant but worsened in the past few weeks.

"The government has taken the decision to respond to the demands of those farmers who have not received compensation," Gandhi told local media.

"The government will try to give back maximum land within the project area, and the rest in adjacent areas as soon as possible," he said, adding that details would be worked out over the next week.