Talks to secure thousands of jobs in Vauxhall and Opel have broken down in acrimony after the German Government accused the US parent company, General Motors (GM), of "scandalous" behaviour by requesting extra state aid.

Peer Steinbruck, the German Finance Minister, said this morning: “We were unpleasantly surprised when this new demand came out of the blue. We found that pretty scandalous."

The German Government, which faces a federal election in four months, had already said that it would provide billions of euros in state guarantees for the winning bidder, with Fiat, the Italian carmaker, and Magna, the Canadian car parts manufacturer, now competing for the business after Ripplewood Holdings, the American private equity group, pulled out.

It emerged last night that Lord Mandelson, the Business Secretary, has secured pledges from both Fiat and Magna to safeguard the vast majority of the 5,000 UK jobs involved should a deal be agreed.

Germany will also look at providing a bridging loan for Opel to support the business if, as widely expected, its US parent files for bankruptcy protection by Monday, 1 June.

However, US representatives asked for an extra €300 million during the overnight talks. Germany's Economy Minister, Karl-Theodor zu Guttenberg, said: “GM again confronted us with new figures.”

The German Government also criticised the US Treasury over its part in negotiations. Mr Guttenberg said that the US Government “could have made more of an effort” with its choice of representative at the discussions.

“We have made a fresh request to the US Treasury and we expect a response before Friday,” he said, calling its input so far “marginal, to put it politely".

Talks over the future of Opel and Vauxhall are expected to begin again on Friday.

Officials and company representatives are racing to extract Vauxhall, which employs 5,000 UK staff, and Opel from GM’s business structure before it goes bust.

GM has transferred control of the European factories and its patents to Opel, allowing the business to operate in the event of a bankruptcy.

It is understood that Lord Mandelson has been assured that, although there will be some limited rationalisation of the UK workforce, the carmaker's future in Britain is guaranteed.

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