Around 200 staff are to be transferred to the three-year programme, called “Drive”, and they will review the design of all parts.

The car manufacturer, which spends around £1 billion a year with British suppliers, said the aim of the programme is “designing cost out and not to cut supplier margins”.

Loss-making MG Rover was sold by BMW two years ago for a nominal £10 and last year made a loss of £200 million, the same amount that the Drive programme is planned to save the company by 2003. It hopes to make a profit by 2004.

Last month, MG announced a strategic partnership with the Chinese car-maker China Brilliance, which last year made around 150,000 cars.

MG makes about 180,000 cars a year in the UK.

The deal with China Brilliance, expected to last 10 years, will help Rover design and develop a replacement for its aging medium-sized car, the Rover 45, and open up the Chinese market to its sales.