Lord Mandelson has just confirmed that the UK's scrappage scheme will fund another 100,000 vehicles.
The rules on the trade-in vehicle are also being amended to include cars registered before February 28, 2000, and vans registered before February 28, 2002.
The scrappage scheme will still expire on February 28, 2010, or sooner if the Government's money, now a total of £400m, is spent out before then.
He told the Labour Party Conference this afternoon that the Labour Government was one that "will stand by" workers at Vauxhall and Jaguar Land Rover.
The Business Secretary said: "All this only makes sense if we invest in our country for growth, growth that will see off recession, growth that will pay down debt."
Commenting on the announcement SMMT chief executive Paul Everitt said: “Lord Mandelson’s announcement of an extension to the car scrappage scheme is an extremely important decision that will inspire consumer and business confidence.
"It will help to stimulate demand, giving more consumers access to it, and create a bridge to a period when economic growth is strengthened and more sustainable.
“The additional 100,000 vehicles should help to counter the likely negative impacts of a return to the higher rate of VAT and the introduction of first year VED rates.”
Paul Williams, chairman of the National Franchised Dealer Association, said: ""The extension of the vehicle scrappage scheme by the Government is a victory for common sense over dogma."
"With the scheme now being a revenue source, a great many jobs will now be safeguarded in both the retail and manufacturing sectors"
The Government's initial pledge when launching the scrappage incentive scheme was for £300m of funding, equating to around 300,000 new car and van registrations.