Labour MP Lindsay Hoyle, a member of the Business and Enterprise Committee, said: "This deal has given LDV a crucial lifeline, which will benefit the workers, local economy and manufacturing.
"It is now essential that all concentration is given to ensure that as many jobs as possible are retained."
It is understood LDV and Weststar had reached a deal earlier in the week, but that it relied on the government financing.
The government has made it clear the £5m is a one-off bridging loan that cannot be extended.
LDV had been due to go into administration at a hearing on Wednesday, but the court was told that LDV's Russian owner Gaz had sold its stake in the firm to Weststar.
LDV's workers have not been given any job guarantees.
The van maker will report on the progress of the deal to the court on 13 May.
LDV's Mr Jones said the moves were "a significant development for LDV and a major step towards an exciting new future for the company".
However, he added: "We cannot stand here today and guarantee the jobs. The marketplace will determine how many jobs are required."
LDV employs 850 workers and is also a key customer for many suppliers. It employs 1,200 people in dealerships.
The company's plant has been at a near-standstill since before Christmas.
R&M Metal Finishings, a company in Stourbridge, West Midlands, supplies components such as bumpers to automotive firms, and LDV makes up about 12% of its orders.
The company's managing director, Spike Rogers, said his staff had been on a shorter working week since December and he was very pleased at the news about LDV.
We are delighted at the government's backing for this company
Tony Woodley, Unite union
"There has been a lot of uncertainty but it is looking promising now," he said. "LDV are a good customer of ours and it has been a quiet period sine December."
The chief executive of the Society of Motor Manufacturers and Traders, Paul Everitt, said the rescue deal was a vote of confidence in the industry.
"I think it does signal that there are now investors out there taking a longer term view and they see the UK motor industry as being a good investment - an industry that has a strong future," he said.
'Long way to go'
Following the news of the government loan, Tony Woodley, joint general secretary of trade union Unite, said he was "delighted at the government's backing for this company".
"There's a long way to go yet, but now thoughts can turn to building a serious and successful future for this company, and to getting these men and women, who have not built a vehicle in months, back to work," he said.
In February, LDV asked the government for a bridging loan because it was "literally running out of cash".
At the time the government said the taxpayer could not be expected to pay for the company's losses, but that talks with LDV were "ongoing and regular".
LDV, which was put up for sale by its Russian owner Gaz late last year, has a long-term association with Weststar making LDV commercial vehicles in Malaysia.
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