Mr Brown visited the Sunderland factory along with Business Secretary Lord Mandelson.
The BBC's Fiona Trott said that it was not clear whether the deal secured the jobs of the 4,000 people employed at the existing Nissan plant. She said 1,200 jobs had been cut earlier this year.
'Low carbon area'
Mr Mandelson said a "low-carbon economic area" would be established in the North East.
As part of the project, 750 charging points would be installed across the region and a training centre specialising in the manufacture and maintenance of low-carbon vehicles would be set up.
Nissan's £200m investment will be spread over five years and the new plant, which will make lithium-ion batteries, will also create and secure additional jobs in the related supply chain.
Nissan also announced it was setting up another battery manufacturing plant in Portugal.
'Vote of confidence'
From Fiona Trott, BBC correspondent at Nissan, Sunderland.
The announcement has allayed the fears of some of the workers here.
But there is also a lot of ambiguity too because the company has talked about creating 350 brand new jobs, but it hasn't been able to say whether or not the existing jobs here have been secured.
Remember that 1,200 jobs were cut at the factory here in January.
But when you speak to the staff most of them say they think that it is good news.
They say that at least people have been coming here and talking about the long-term future of Nissan and news like that is better than no news at all.
Michael Steventon, head of automotive research at consultants KPMG, said that the announcement was a vote of confidence in the Nissan workforce in Sunderland.
"Batteries are only part of a vehicle but they are an expensive, logistically significant part," he said.
"It does mean that Nissan is more likely to manufacture electric vehicles in the UK than elsewhere in Europe," he added.
However, he said that if the UK wanted to really capitalise on the move toward hybrid vehicles, more investment in research and development was needed.
The government said it was working with Nissan on supporting the investment by offering grants and loan guarantees, including support through its Automotive Assistance Programme.
Earlier this year, the government set aside £2.3bn to support the UK's ailing car industry - but nothing has yet been paid out.
"The North East has distinguished itself as the first specialised region for ultra-low-carbon vehicles," Lord Mandelson said.
"This is good news not just for the North East, but for the whole of the UK, helping to attract foreign investment and securing UK's place as a global leader in hi-tech manufacturing and automotive industries," he added.
TUC general secretary Brendan Barber said: "This is an excellent initiative. It combines active industrial policy and environmental transformation, pointing the way to the kind of economy we will need to build after the recession."
The announcement from Nissan comes only days after its Japanese rival Toyota said it would start manufacturing the new Auris hybrid petrol-electric vehicle at its plant in Burnaston, Derbyshire from mid-2010.
We asked for your reaction to this article. Please find a selection of your comments below.
Perhaps, but how much public money has been promised in grants, and how much has been committed in loan guarantees? And how much is this per job created (or rather promised without guarantee by the company)? C Harvey, Brighton, UK
To me this is just another Nissan pipe dream, every time the going gets tough they lay people off forcing the government's hand to invest more money into Nissan, for example take the Qashqai or what ever you call it, they took on an extra 300 people when they launched this new car as soon as sales dropped the laid off 1200 people, to me Nissan is just playing the system to earn more money out of this country and government. George, Washington Tyne and Wear
Not a Nissan worker, but I was wondering whether the environmental legislation will require that the used batteries are returned to Wearside for reclamation in a few years time? Just a bit concerned about all that toxic waste... Sam, Sheffield, UK
This is excellent news for the North East and particularly the Sunderland area. It has and still is a worrying time for the north east due to the numerous jobs losses which have occurred recently. The North East and places like Sunderland have blossomed in the last 15 years and I would hate to see it return to the dark days where jobs were few and far between and cities were left to decay. Such investment will not only prosper people today, but also secure jobs for the future. Emma Barnes, Edinburgh (originally from Sunderland)
This is excellent news. At last we have a government which is bold enough to invest in a future with clean, quiet driving vehicles which don't pollute our cities. great vision and good timing to take advantage of an industry at a turning point. success requires great vision and bold strokes. Now the people of the North East will be able to boast around that they are in the vanguard. Pete, London, UK
What kind of environmental impact does this kind of battery production bring with it? What kind of metals and associated chemicals will be used? Is this a Trojan horse? Damien, Hayes, UK
This is astonishing... Why is taxpayer's cash being used to fund a Japanese company to help it manufacture batteries when there is a British company in Dundee already doing this? Dick Winchester, Aberdeenshire
Whilst I'm pleased to see economic investment in an area of the country that could could certainly benefit from it, I do feel that all Nissan are doing is pandering to a flawed 'green' agenda and creating jobs in a market place that will be redundant in 5 years when hydrogen fuel cells become viable. Glenn Willis, Lyme Regis, England
I am not working at the Nissan factory. It will be good opportunity for the electrical engineers and certainly if there will be any vacancies for the electrical engineers then I will be happy to apply there. Talhat Siddique, Warrington
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