UP to 1,000 jobs could be created at the site of the collapsed MG Rover car business after a "landmark" deal was signed yesterday, opening the way to resume car production.

Chinese firm Nanjing Auto-mobile Association agreed a 33-year lease with the owners of the huge Longbridge site, bordering on North Worcestershire, and pledged to build a sports car next year.

Union leaders and local business groups welcomed the announcement, although a local Labour MP said the news should be "tempered with realism." More than 6,000 jobs were axed when MG Rover went out of business last year and thousands of others were lost in firms which serviced the former car giant.

Workers were told that up to 2,000 jobs could be created after Nanjing bought MG Rover for £50m last summer, but that figure has now been halved.

The agreement signed in a ceremony at Longbridge is for Nanjing to take the 33-year lease at a rent of about £1.8m a year.

The deal covers the South Works of the former MG Rover plant, incorporating two car assembly plants, the paint shop and administrative offices.

The terms of the lease incorporate a six month break clause in case Nanjing is unable to confirm a viable long term future for the site.

Mr Wang Hongbiao, Chairman of Nanjing said: "I am delighted that we have reached an arrangement with St Modwen Properties. This means that we can move forward with our business plan to build cars at Longbridge.

"The MG brand is famous and we are proud to project it into an exciting future."

Mr Hongbiao confirmed that Nanjing anticipated employing up to 1,000 new staff at Longbridge where production of the MGTF sports model would start in 2007.

Speaking through an interpreter, Mr Hongbiao said: "We move forward according to our original plan.

"Next year we will produce a sports car here. After that, we will produce a car which will make profits."

Bill Oliver, Chief Executive of St Modwen Properties, described the agreement as opening a new chapter in the long history of car production in Birmingham.

"We always said that if there was a viable plan for a long term automotive use at Longbridge, we would do our best to facilitate it.

"This agreement is the outcome of that commitment, and we are now looking forward to a long and fruitful relationship with Nanjing.

"We are hoping that with this agreement established, the other regeneration proposals proceed speedily through the planning process, to bring forward the creation of further jobs and provide major improvements to the Longbridge area."

Councillor Mike Whitby, Leader of Birmingham City Council, added: "Since the announcement of the closure of MG Rover in April 2005, I have been determined to bring about a resumption of car building at the historically significant site of Longbridge.

"We have worked tirelessly with Nanjing to develop a relationship of trust and confidence, which are the essential pre-requisites of any deal.

"Nanjing asked Birmingham City Council to be its strategic partner in its negotiations with St Modwen. We have given them advice and support on issues such as regeneration and planning which has culminated in today's announcement.

"We have also safeguarded the MG brand in Birmingham, and I would like to congratulate both Nanjing and St Modwen for their efforts in bringing this tremendous deal together."

Labour MP Richard Burden, whose Birmingham Northfield constituency takes in the former MG Rover car plant, described today's announcement as "positive news", adding: "My welcome is tempered by realism, first of all about what is being proposed. This is not mass car production at Longbridge. We're talking about, in the early stages, well under 1,000 jobs.

"The key thing for this area is how the contribution from Nanjing can link in with the development of the rest of the Longbridge site and developments in south west Birmingham."

Dave Osborne, national officer of the Transport and General Workers Union said: "We very much welcome today's announcement of Nanjing's commitment to Longbridge through the signing of the lease.

"It is confirmation of the first step of the development of their business plan which we are told will see the production of 100,000 vehicles a year and 1,200 new jobs.

"We look forward to continuing to work with Nanjing in restarting car production as soon as possible and consolidating our relationship with the company."

Roger Maddison, national officer of Amicus said: "We are extremely please that Nanjing is committed to the Longbridge site. We are aware that there are still some financial commitments Nanjing needs to make but we are looking forward to the day when cars run off the production line at Longbridge again."

Jerry Blackett, policy director at Birmingham Chamber of Commerce, said the news gave the local business community a degree of certainty about the future of the Longbridge.

"We've got the MGTF being produced in 12 months' time from this site. For Birmingham business, that means jobs. We've also got more certainty about the future about the whole site.

"The future of Longbridge is not about cars any more. It's about the other things, the 10,000 jobs that will be created in new technologies, in housing and retail on the site."

Mr Blackett said it was important to know what Nanjing had planned for the car site at Longbridge as it sat in the middle of the rest of the regeneration area.

"Today we got a clear message. We know what's happening to the car bit. We can now go on and plan for the real future of Longbridge."

St Modwen acquired 412 acres of the Longbridge site in two deals in 2003 and 2004 for £57.5 million and leased it back to MG Rover.

Around 180 aces are earmarked for a multi-million pound redevelopment, including offices, houses and a technology park.