The Japanese company is to spend £200m equipping the plant to make the new Primera. Before the announcement, there had been fears that the factory might close.

The BBC's Ian Reeve: "A new model will be built in Sunderland"

Earlier this week the manufacturer announced 21,000 job cuts worldwide and the closure of three plants in Japan.

Nissan had already announced that the Almera will start production at its Wearside factory in January. The Micra and Primera are already made there.

'Best team in world'

John Cushnaghan, managing director of Nissan Motor Manufacturing (UK), said: "The Sunderland workforce is a winning team. Their commitment to quality and determination to be the best in the industry has won this investment.

"In my opinion they are the best in the world. I am delighted that the next Primera will be built here in Sunderland."

More than one million Nissan Primeras have been built in Sunderland since the car was first introduced to Europe in May 1990.

The Sunderland plant is the most productive car factory in Europe.

The company spends about £600m each year with 205 European suppliers making components for the Primera, 128 of them in the UK.

£5m funding

Trade and Industry Secretary Stephen Byers said he was "delighted" with Nissan's announcement.

"The fact that the project has been won by Sunderland in the face of strong competition from Japan reflects the plant's world-class performance.

"It is a vote of confidence in the workforce and in the UK as a place for manufacturing and investment," Mr Byers added.

He said Nissan had received £5m in government funding towards the project.