John Thompson, Yorkshire regional director, said: “The Government should consider letting Rover go instead of pouring good money after bad."
He believes the cash would be better spent creating jobs in the West Midlands and it was clear Rover was struggling to remain a sustainable business.
"Spending £100m in the West Midlands is a far wiser use of the money than sending £100m to Shanghai to prop up what is clearly a struggling company with a bleak future.
"The subject of MG Rover is naturally very emotive but I think everyone would like to see the best use made of resources, not just for the next month but for the future and to support generations that are just coming into work.
”The collapse of MG Rover is a disaster for the West Midlands, but it is up to all the organisations and local authorities in the region to pull together to mitigate the effects and create something positive out of a negative," Thompson said.
Last night management at MG Rover stressed their commitment to securing an agreement with its proposed Chinese partner, despite fears that talks had stalled.
A team of officials from the Department of Trade and Industry has been in China since Friday trying to secure a deal between the British firm and the state-owned Shanghai Automotive Industry Corporation (SAIC).
Chairman of MG Rover owner Phoenix Venture Holdings, John Towers, said yesterday that he and SAIC remained committed to a successful outcome.
A Government offer of a bridging loan of £100m remains on the table in a bid to keep MG Rover solvent as talks continue.
Tony Parr, managing director of engineering firm AP Smith which produces engine parts for Rover, told BBC Radio 4's Today programme that his company - which relies on Rover for 15-20% of its business - would probably have to cut some jobs if the deal failed.
"I would think the supply base in general would have serious difficulties in replacing the work and, of course, the jobs," he said.
"It's not just the 6,000 jobs at Rover group. It's the pressings, castings companies, all manufacturing plus all the transport logistic companies.
"I think Longbridge could be a wasteland virtually after all this happens."