Fiat has denied a newspaper report it was only interested in taking a stake in Chrysler if the American firm received more US Government money.
The story said the deal would only go ahead if Chrysler was given $3 billion in addition to the $4 billion granted last year, which Fiat denies according to The Times.
The Italian carmaker has confirmed it is in negotiations with Chrysler to acquire a 35% stake in the ailing US manufacturer.
Both companies have signed a non-binding term sheet to establish a global strategic alliance.
The deal would give Chrysler access to Fiat's mini, small, lower-medium and upper-medium platforms, engines and transmissions.
Fiat will also make its distribution network available to Chrysler in key growth markets and in return Fiat will have access to the US market and 4x4 models.
Both companies have said the there are substantial cost savings to me made from the alliance.
The agreement does not commit Fiat to funding Chrysler in the future.
Chrysler, which was acquired by private-equity firm Cerberus in spring 2007, saw its sales drop 30% last year. It received $4 billion (£2.8bn) in emergency US government loans this month and plans to seek another $3bn (£2bn).