Toyota has been lagging behind its rivals in cost-cutting
Toyota is planning to suspend production for more than a year at one of its production lines in Japan.
It will be the first time it has made a long-term suspension at one of its domestic plants.
The closure at the plant in Aichi prefecture will reduce output by 220,000 vehicles.
Toyota also confirmed it is considering suspending one of its production lines at Burnaston in Derbyshire in the UK, but that no decision had been taken.
A Toyota spokesman told the BBC that moving from two production lines to one was one of many options being considered.
"We are always considering the best production structure, but nothing has been decided regarding one-line operations at the Burnaston plant," he said.
Only a month ago, Toyota announced plans to build the hybrid version of its Auris model at Burnaston, which would be its first European-built hybrid.
The Burnaston plant employs 4,100 workers, making models such as the Avensis and Auris.
Japanese media reports have suggested that Toyota is planning to cut its overall capacity by between 700,000 and one million vehicles a year.
One of the two lines at the Japanese plant will be closed from Spring 2010 until the second half of 2011.
Toyota has reported operating losses for the past three quarters as recessions around the world have hit demand for its vehicles.
In the three months from April to June, its rivals Honda and Nissan both reported profits as a result of cost-cutting.
Toyota was already running some of its plants below capacity and had imposed some short-term suspensions, but the Aichi plant will be its first long-term cut.
The company has a global capacity of about 10 million vehicles a year, but it only plans to produce 6.68 million vehicles this year.