The European Union crisis fund available to member states and selected neighbours is to be more than doubled to €25 billion (£19.7 billion) as signs emerge that Hungary may not be the only nation to need an emergency cash injection.

Iceland is so far the only other eligible country to apply for help from the EU's macro-financial assistance fund but officials are braced for inquiries from other nations known to be in difficulties such as Ukraine.

As well as the extra loan facility for countries - which will be financed by bond issues - the European Commission said that it supported making an extra €40 billion available for the ailing car industry.

However, the plan to call on the European Investment Bank to give soft loans to help carmakers to develop low-carbon technologies was criticised as an “old-fashioned industrial policy dressed up as part of a green New Deal” by Green MEPs.

Both moves were set out as part of the EU's strategy to respond to the economic shocks generated by the credit crunch, a strategy that could include the fast-tracking of regional aid budgets earmarked for the 2007-2013 period, José Manuel Barroso, President of the European Commission, said.

“We stand ready to provide substantial balance of payments assistance to other member states [than Hungary] experiencing balance of payment pressures or serious financial stability risks,” Mr Barroso said, adding that the Commission would announce further measures next month. “We will bring forward on November 26 a comprehensive European Union recovery plan. That plan will cover targeted short-term actions.”

Joaquín Almunia, the Economic and Monetary Affairs Commissioner, confirmed that Iceland was the only applicant other than Hungary at the moment and added: “We are facing not only a financial crisis but a serious slowdown hitting households, business and jobs. We are ready to provide support if it is needed. To give a loan to a country under this facility, the European Community will go to the markets to issue bonds and for these purposes, the EU budget is the guarantee.”

The increase in the EU's mid-term loan facility of €12 billion came after a call on Tuesday from Nicolas Sarkozy, the French President, for a big increase.

The car sector was given a shot in the arm when Günter Verheugen, the Industry Commissioner, said that he supported in principle requests for soft loans to help producers to meet targets for lower carbon emissions.

“We are talking about a credit volume of €40 billion available for research and development in the area of energy efficiency and lower fuel consumption of new vehicles,” Mr Verheugen said.

His support for the move came as Skoda suspended production for a week in the Czech Republic in the latest sign of the dramatic slowdown in car sales.

Christian Streiff, chief executive of Peugeot Citroën, who is also head of the European Automobile Manufacturers Association, said later that fourth-quarter sales were set to fall. “In the third quarter, there was a drop of about 10 per cent ...in the fourth quarter it will be even more.”

But Rebecca Harms, vice-president of the Greens in the European Parliament, said: “While Günter Verheugen attempts to greenwash massive state aid and credit to the car industry, he is also lobbying together with automakers to water down CO2 reduction targets for new cars.

“Helping the car industry out of a crisis is unacceptable if it comes in the form of disguised subsidies to companies that are hell-bent on continuing with business as usual.”

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