CRISIS talks to save Jaguar Land Rover were thought to be close to collapse last night, in a row over tough conditions the Government wants to impose on a rescue package.

Both sides insist talks are still ongoing as car giant JLR, which employs 2,000 people at its Halewood plant, seeks Government backing to help it through the recession.

But its owner, Tata Motors, is understood to be refusing to accept tough terms the Government wants to impose on the loans it needs.

Howard Wheeldon, senior strategist at BGC Brokers, in London, said he believed the conditions included severe restrictions on the Government’s willingness to underwrite a £340m loan offered by the European Investment Bank (EIB) to partly finance JLR’s development of new eco-friendly cars.

The Government is also believed to be demanding that Tata – which is itself struggling to raise money on the international capital markets – pump hundreds of millions of pounds more into JLR, on top of the £900m it has already committed since taking over the company from Ford last year.

Ministers are also said to be demanding a high level of management control of JLR in exchange for the cash – including the right to choose a chairman and to have a seat on the board.

Tata is not commenting on the reports about the talks. However, a source familiar with the situation said: “This looks like an offer designed to be rejected because of extortionate conditions.”

A JLR spokesman said: “We have always said these discussions would be complex and take time.

“They are ongoing and we are making progress.”