Japanese carmaker Nissan Motor is to invest £125m to build a new compact vehicle from mid-2013 in Sunderland, northeast England, where its workforce will rise by 600 to 6,000.
The company said the move, which will be supported by a $15m loan from Britain, will create a total of 2,000 jobs at Nissan and its suppliers.
Nissan's statement gave no detail of the vehicle ahead of a presentation at the Geneva motor show, to be attended by Britain's business secretary, Vince Cable.
Cable was also due to meet General Motors bosses to ask them not to axe its plant in Ellesmere Port, northwest England.
Britain has been seeking to save automotive jobs as the European sector braces for capacity cuts.
Nissan makes its Qashqai and Juke models at Sunderland - the largest car factory in Britain where it produces around 500,000 vehicles annually.
The company ended British assembly of its Micra subcompact in 2010, transferring production to lower-wage economies including India, and replacing it in Sunderland with the pricier Juke compact crossover.
City A.M. Reporter