The new owner of MG Rover today paved the way for car production to begin again at the disused Longbridge factory in Birmingham after it signed a "landmark" 33-year lease on the site and reiterated its commitment to the MG brand.

But observers were quick to note that Nanjing Auto, which bought Rover for £50 million after its collapse last year, retains a crucial clause in the new lease that means it can still bail out after just six months if it is unable to establish that Longbridge is viable over the long term.

It also remains unclear how many jobs would be created at a reborn Longbridge following the inking of today's multi-million pound leasehold deal. Some 6,000 jobs were lost when Rover went bust and was forced into administration with crippling debts last year.

Nanjing signed the new lease deal with St. Modwen Properties, a listed British property firm that owns the site and which claimed the agreement was struck to "secure Longbridge car production". Nanjing today said it would start making MG TF sports cars as from 2007.

The Chinese company does not have the right to make Rover branded cars - that licence is still owned by German car group BMW, although it is currently up for sale.

Under the terms of today's deal, Nanjing will pay St. Modwen a starting rent of £1.8 million a year for 105 acres of the 469-acre Birmingham site. This covers the South Works of the former MG Rover factory, including two car assembly plants, a paint shop and administrative offices which together total more than 2 million square feet.

But, as it unveiled the agreement, St Modwen added that: "The lease terms incorporate a six-month break clause in case Nanjing is unable to confirm a viable long-term future for the site."

Wang Hongbiao, the Nanjing Auto's chairman who worked closely with Birmingham City Council to finalise a new lease, said he was "delighted" to have reached an agreement.

"This means that we can move forward with our business plan to build cars at Longbridge. The MG brand is famous and we are proud to project it into an exciting future," Mr Hongbiao said.

Bill Oliver, chief executive of St. Modwen, added: "We always said that if there was a viable plan for a long-term automotive use at Longbridge, we would do our best to facilitate it.

"We are hoping that with this agreement established, the other regeneration proposals proceed speedily through the planning process, to bring forward the creation of further jobs and provide major improvements to the Longbridge area.

Mike Whitby, the leader of Birmingham City Council who was central to the new leasehold agreement, told the BBC that he believed between 600 and 1,000 jobs would be created as a result.

Today's agreement is a setback for business troubleshooter David James and his Project Kimber consortium. Mr James had been proposing a co-operation agreement with Nanjing that would have seen MG Rovers being produced in Coventry instead.

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