Workers at Nissan's Sunderland factory took the biggest blow yet in the car industry crisis yesterday when 1,200 jobs were cut.

The reduction represented more than a fifth of the workforce and is the first time that Nissan has cut permanent posts since it began production in Britain in 1986. The factory had been Europe's most productive car plant.

Workers learnt of the job losses when they returned from an extended Christmas shutdown.

The news overshadowed the Cabinet's meeting in Liverpool, where Gordon Brown acknowledged concern for the future of 4,400 jobs at the Vauxhall plant at Ellesmere Port and Jaguar Land Rover's Halewood site. Workers at those plants have yet to return from festive breaks.

The car industry has told the Government that it faces an emergency, and unions have called for a £13billion package of aid. However, it is thought that a potential rescue package drafted by Lord Mandelson, the Business Secretary, has been derailed by Treasury concern that help for Britain's biggest industry would set a precedent.

Lord Mandelson pledged that the Government would work with the regional development agency to help former Nissan workers. He said: “This is a workforce that has many of the skills that UK and worldwide industry will need as conditions improve.”

He intends to visit the Sunderland plant to work with Nissan on plans to manufacture the carmaker's new family of electric vehicles there.

Nissan said it hoped the cuts could be achieved voluntarily. The toll includes 800 permanent jobs and 400 temporary contracts. Trevor Mann, its senior vice-president for European manufacturing, said: “Sunderland is operating in extraordinary circumstances not of our making. It is essential we take the right action now to ensure we are in a viable position once business conditions return to normal.” Next month Honda, which has two factories in Swindon, will begin a two-month shutdown, the biggest of the crisis.

The Unite union has warned that 70,000 jobs are at risk in vehicle manufacturing and the supply base that serves the automotive industry. Urging swift action by ministers, Derek Simpson, its joint general secretary, said: “I hope the lessons of Rover have been learnt. In 2005, thousands lost their jobs, most of them were forced to abandon manufacturing and take a pay cut just to stay in work. It is imperative that we protect our skills base otherwise Britain will come out of recession considerably weaker.” Paul Everitt, the chief executive of the Society of Motor Manufacturers and Traders, said: “Government must ease access to credit and finance [and] provide incentives to encourage the take-up of new vehicles and maintain public procurement of new vehicles.”

The Prime Minister sought to offer a reassuring presence as he toured Liverpool's regenerated docks by boat, attended a “listening event” and staged the third Cabinet meeting outside London in recent months.

He discovered a city buoyed by its success last year as European Capital of Culture and reshaped by high-rise office and apartment blocks and by Liverpool One, the multi-billion pound retail and leisure precinct. But the investment that characterised those developments is evaporating, with high street stores closing and manufacturing jobs being lost. As Mr Brown arrived, Tulip International, the meat processor, announced 300 job losses at Bromborough, Wirral.

Addressing fears over car industry jobs, he said: “We are talking to the motor industry about what we can do to help. Jaguar Land Rover has owners and we are prepared to talk to them about how the downturn can be dealt with, but in the first instance the company is going to have to make its own decisions. The issue is to get the the economy moving again.”

Later, in the brutalist surroundings of the Liverpool Echo Arena and Convention Centre, Mr Brown attempted a few warm-up jokes for an invited audience of 240 before turning to the economy. He acknowledged that homeowners needed more security and promised further measures to get banks lending again.

Cabinet ministers, who later fanned out across the region to meet the “community”, hosted more intimate discussions at individual tables. The public emerged flattered but disappointed that the Prime Minister had not offered more spectacular fare.

Ian Midwood, 78, said: “Gordon Brown was rather bland. There was nothing that he had not said before.”

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