Germany's Economic Minister today branded a decision by America's General Motors (GM) to scrap the sale of its European business as "totally unacceptable."

Rainer Bruederle condemned the car giant's eleventh-hour U-turn on the deal to sell Opel and Vauxhall to Magna, a Canadian car parts supplier, and demanded immediate details of GM's new plans. Christine Lieberknecht, the premier of Thuringia state, which an Opel plant is based, called the decision a“low blow”.

GM's move is a particular surprise for Angela Merkel, Germany's Chancellor, who had lobbied hard for Magna and Sberbank, its Russian partner, to buy Opel as the best way to preserve German jobs.

Juergen Reinholz, economy minister of Thuringia, said GM had signalled it would repay a €1.5 billion German bridging loan for Opel by the end of November.

Lord Mandelson said that he was keen for "very early discussions with GM over their plans for the business and how they will affect British plants and workers."

He added: "I have always said that if the right long-term sustainable solution is identified then the Government would be willing to support this."

British unions were delighted with the decision, which was announced late yesterday after a GM board meeting in Detroit.

The deal had threatened thousands of jobs at Vauxhall's Ellesmere Port and Luton plants which employ 5,500 staff, although a plan had been agreed that would have saved far more workers than had been initially expected.

Tony Woodley, joint leader of Unite, the union, said the decision was "fantastic", adding: "There is no logic in breaking up the company. I believe it is the right decision for Britain and our plants."

He called on Lord Mandelson to demand that GM give guarantees about future production.

GM had agreed to sell a 55 per cent stake in its business to Magna International and Sberbank, the Russian lender, to raise cash after almost being bankrupted this year.

It is understood though that the American board had become anxious that the planned sale could see the two car brands competing against their former parent in high-growth markets such as Russia.

The group said that Europe's business environment and GM's overall health had both improved since it put the division up for sale and that a restructuring plan was now the better option.

Last night, Siegfried Wolf, Magna's joint chief executive, said: "We understand that the board concluded that it was in GM's best interests to retain Opel."

It added that it will "continue to support Opel and GM in the challenges ahead."

Germany had looked to be the winner from the Magna deal, which had secured the future of four Opel plants in the country. However, negotiations by Ms Merkel had caused controversy.

Concerns were raised over her offer of €4.5 billion (£4.02 billion) in financial aid in return for the Magna deal.

Lord Mandelson was among those who had complained to the European Commission warning it not to accept anything that looked like a "political fix or any linkage between aid and retention of jobs in any specific plant or country."

Joelle Milquet, vice-premier of Belgium, where a big Opel factory was to be closed, had also criticised the deal saying: "I think the German Government sought its own advantage."

The commission, which has powers to claw back aid that does not comply with strict European state aid rules, was examining the deal.

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