The French carmaker said 900 positions will be created at the plant itself while another 2,000 jobs are expected among suppliers in the region.

The success of the new Peugeot 206 which has attracted 180,000 sales orders across Europe in just over a month has meant production must be increased, the company said.

Peugeot managing director Richard Parham said Ryton workers' recent record of high productivity and quality standards has earned their plant the extra work.

Efficient carmaker?

"Their efforts have opened employment opportunities for thousands of Midlands workers and secured further investments for Peugeot in the UK," Mr Parham said.

His comments are in stark contrast to the productivity picture being painted nearby in Birmingham.

Most attention has recently focussed on rival Rover which is set to shed 2,500 jobs overall, many at its Longbridge factory, amid a radical restructuring to boost efficiency.

Ken Jackson, general secretary of the Amalgamated Engineering and Electrical Union, said the Peugeot expansion was "excellent news for the West Midlands".

"The AEEU will work with the company to add the maximum amount of value to the investment it is making at Ryton," he said.