Toyota today officially announced plans to manufacture a full hybrid version of the Auris in the UK.
The vehicle will be built at the company's plant in Burnaston, Derbyshire from mid 2010.
Engines will be produced at Toyota's factory in Deeside, North Wales.
Tadashi Arashima, CEO and President of Toyota Motor Europe said: "With today’s announcement, Toyota has taken a significant step forward in ensuring full hybrids become more accessible to a wider range of customers.
"Such efforts are crucial if we are to see more low-carbon vehicles on European roads."
Arashima added: "Our decision to produce a full hybrid in the UK reflects both our confidence in the quality and commitment of the TMUK workforce and the strength of our long-standing partnership with the UK Government.
"Today’s announcement is positive for Toyota, our UK suppliers and the local communities here."
Business Secretary Lord Mandelson said it was a welcome and forward-looking investment in Britain from a world class manufacturer.
He added: "As part of our low carbon industrial strategy we set out to make Britain the best place in the world to develop low carbon vehicles. These commitments, backed by the formidable skills of the UK automotive workers enable companies like Toyota to invest with confidence in low carbon car production in the UK."