'We have started preparing our UK plants for production of the next-generation MINI and this investment underlines that the UK will remain the heart of MINI production,' announced Norbert Reithofer, chairman of the Board of Management of BMW AG. 'The MINI brand has made a significant contribution to BMW Group's success in markets around the world and we anticipate that this will grow further in the future.'

The majority of the £500m will be used to create new production facilities and equipment at MINI Plant Oxford and will help to safeguard over 5,000 jobs.

The BMW Group has been producing MINI at Plant Oxford since 2001 and has produced nearly two million vehicles.

Business Secretary Vince Cable said that the announcement is a real tribute to the success of British automotive manufacturing, adding: 'The competitiveness of automotive manufacturing in this country is shown by the commitment of the biggest global firms to make serious investments in long-term production here and as a government we are determined to make sure this success story remains a big part of the future economic growth we must secure.'

As part of the expansion of the MINI product line-up, the MINI Coupé will be launched in 2011, followed by the MINI Roadster in 2012 – both of which will be produced in Oxford.

The news follows yesterday's announcement by Nissan that it will build the next version of the Qashqai in its Sunderland plant in the UK, under a £192m (€216.9m) investment, saving 6,000 jobs.