Ford's Bridgend plant will produce low carbon engines
Skilled jobs will be safeguarded at the Ford plant in Bridgend after the firm's five-year investment plan received new UK government support.
Business Secretary Lord Mandelson has agreed to back Ford's proposed £1.5bn investment in environmentally friendly engines and vehicle technologies.
Some 2,000 people work at Bridgend Ford and the scheme has also been supported by the Welsh Assembly Government.
Ford chairman Joe Greenwell welcomed the "positive support".
Deputy First Minister Ieuan Wyn Jones confirmed that the assembly government had provided £13.4m of support for the Bridgend plant through its Single Investment Fund.
Mr Jones welcomed the new five-year investment plan, saying: "It secures jobs and boosts for the development of Wales' green economy."
He added: "Wales will now be producing the new generation of low-carbon engines in a hugely competitive global market. This shows Wales can and is able to compete with the best when it comes to manufacturing.
"The plant is now perfectly positioned to make the most of the green revolution that is taking place in the motor industry."
Prof Garel Rhys, chair of the economic research advisory panel for the Welsh Assembly Government, said: "What's happening now is the unlocking, at last, of the £2.3bn that Lord Mandelson mentioned at the beginning of 2009.
"And this money is to help the newly-discovered motor industry, on the part of Government, that it could do a great deal for the economy," he told BBC Radio Wales.
"But it's taken until now to work out what it should be spent on.
"The first tranche was about two weeks ago - the 300m euros for General Motors in Ellesmere Port - and of course Ellesmere Port has quite a lot of Welsh workers from north east Wales.
"These now are schemes where Ford and Nissan are included, and included in this is a very important development in Bridgend where there will be new engine facilities going in for environmentally friendly, or less harmful, engines.
"That has been waited for and it does make Britain a contender in the green revolution in the motor industry. This money is a loan guarantee.
"It's still public expenditure because the guarantee might be taken down but it does show a lot of movement, and a lot of Welsh interest in it and a Welsh implication."
The UK government will provide £360m in loan guarantees towards six projects through its Automotive Assistance Programme, backing a proposed loan of £450m which is being considered by the European Investment Bank.
Currently 25% of all Ford engines worldwide and more than half of all Ford diesel engines are made in the UK.
Ford's plans will also safeguard about 2,800 skilled jobs at its research centre in Dunton, Essex, and its factories in Dagenham, Essex, and Southampton.
Lord Mandelson said: "Ford is a major investor in research and development in the UK.
"Its proposals represent further significant investment in the UK. The government stands ready and willing to support these innovative research and development projects backed by a highly skilled workforce.
"As part of the automotive industry, Ford has an important role to play in the UK's aim to be one of the leading manufacturers of low carbon vehicles."
Mr Greenwell said the support "greatly assists in delivering Ford's commitment to invest over £1.5bn in new, affordable, volume-produced low CO2 technologies".