The UK government’s move to extend its version of ‘cash for clunkers’, widely known here as the ‘scrappage scheme’ has been widely welcomed.

Government business minister Peter Mandelson announced on Monday afternoon at his Labour Party’s annual conference in Brighton that the scheme would get an extra GBP100m enabling another 100,000 car buyers to benefit from the incentive.

The scheme had been due to end in February or when the GBP300m originally allocated ran out and this had recently been estimated at as early as November.

A Society of Motor Manufacturers and Traders spokesman said: “We are obviously pleased that the industry call for an extension has been listened to by the government.”

Trade website Parkers said 227,000 cars had been ordered under the scheme so far.

The SMMT had been campaigning for the scheme to be extended to February 2010 in order to counter the rate of VAT [sales tax] going back up from 15% to 17.5% and the introduction of the one-off first-year road tax rates.

Along with the extension comes some changes: the required age for trading in a car will be extended by six months to include cars registered on or before 29 February 2000 or ‘V’ prefix registration and the current age restriction on vans of 10 years or older will be changed to any van that is eight years old or over.

Mandelson told the conference: “There are encouraging signs that the economy is picking up. But recovery remains fragile and uncertain, especially in manufacturing and one of its cornerstones, the car industry.”

David Raistrick, UK manufacturing leader at Deloitte said: “Today’s announcement that the scrappage scheme will be extended to include an additional 100,000 vehicles is fantastic news for the automotive industry.

“The continued support of the scrappage scheme will help the automotive industry achieve a long lasting recovery.

“As Britain’s automotive and wider manufacturing sector continue to play a large role in helping the UK economy emerge from recession this positive announcement comes at a very critical time.”

“The extension of the scrappage scheme by government is a victory for common sense over dogma” said Paul Williams, chairman of the National Franchised Dealers Association.

“With the scheme now being a revenue source, a great many jobs will now be safeguarded in both the retail and manufacturing sectors.”