Volvo and Saab have been lobbying for financial support
Sweden's troubled carmakers, Volvo and Saab, have been given a 28bn kronor (£2.3bn, $3.5bn) government bail-out to help them cope with falling demand.
This comes after the US House of Representatives approved a $14bn (£9.4bn) rescue for US car firms.
Volvo and Saab had been asking for Swedish state support because of the financial woes of their US owners.
The plan consists of a maximum of 20bn kronor in credit guarantees, and up to 5bn kronor in rescue loans.
As well as the credit guarantees and rescue loans, the government said it would also earmark 3bn kronor in research and development funds for the car industry.
Volvo is owned by Ford, while Saab is owned by General Motors, which had warned that without US government help it could soon run out of money.
The Swedish government, which had previously said it would await a US decision on a rescue package before announcing measures, reiterated it would not take over the struggling companies.
"We should not own companies," said Finance Minister Anders Borg.
However, he said that "with the financial woes that we have, we must meet the concerns in the car industry".
The government should "create conditions for them to be able to operate on the market," he added.
The car industry accounts for 15% of Sweden's exports and, with some 700 companies and suppliers, employs about 140,000 people.
The government plan will now be presented to parliament for approval.