The government has promised MG Rover’s potential Chinese partner a £100 million "dowry" to prevent the collapse of a proposed rescue deal for the Midlands carmaker.

DTI officials are said to have instructed the British Embassy in Beijing to offer the Shanghai Automotive Industry Corporation (SAIC) sweeteners for signing a partnership agreement.

Patricia Hewitt, the trade and industry secretary, and John Prescott, the deputy prime minister, are reportedly concerned that Rover's collapse could affect Labour's core vote at the election.

Lord Oakeshott, a Liberal Democrat Treasury spokesman, said: "This is throwing good taxpayers’ money after bad. There are many better uses for £100 million of taxpayers’ money [than] avoiding electoral embarrassment."