Toyota confirmed plans yesterday to build a hybrid version of its Auris hatchback in Britain.

The world’s biggest carmaker said that production of the model would start at its factory in Burnaston, Derbyshire, in mid-2010, safeguarding 400 jobs.

The engines will be made at its plant in Deeside, North Wales.

The decision is a boost for Burnaston after Toyota said in March that it planned to cut UK production to save on costs.

It has already reduced working hours and base pay by 10 per cent in the light of falling European sales, down 10 per cent on last year.

Tadashi Arashima, Toyota’s European chief executive, said that the decision would make hybrid cars more affordable, but did not announce how much the Auris would cost.

“Such efforts are crucial if we are to see more low-carbon vehicles on European roads,” he said.

“Our decision to produce a full hybrid in the UK reflects both our confidence in the quality and commitment of the Toyota UK workforce and the strength of our long-standing partnership with the UK Government.”

The Government welcomed Toyota’s move. Lord Mandelson, the Business Secretary, who will visit the Burnaston plant today, said: “This is a forward-looking investment in Britain from a world-class manufacturer.”

Toyota’s UK operations began production in 1992 and employ about 4,100 workers.

The Burnaston plant has produced more than 2.5 million vehicles, including the Corolla and Auris.

Meanwhile, a Business and Enterprise Select Committee report on the UK car industry, published today, criticises the Government’s delay in agreeing support measures after announcing the Automotive Assistance Programme in late January.

“We are profoundly disappointed that to date not one single penny has been advanced through the scheme. We hope that this will change rapidly,” it says.

“The Government must not only support individual companies, but be seen to support the industry as a whole, and act with more urgency and consistency than it has done so far.”

The committee said that despite the belated introduction of the scrappage scheme, which gives motorists a £2,000 rebate on buying a new car in exchange for one more than nine years old, there were “encouraging signs” that it has been effective.

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