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A £27m Government grant will enable Land Rover to build its most eco-friendly car ever.
Set for production by the end of this year, the new model will come to market as a Range Rover, and will be based on Land Rover's LRX concept car shown last year.
"It would be the smallest, lightest and most efficient Range Rover we've ever built," said Phil Popham, Land Rover managing director.
"Our engineering feasibility study has shown that we can very successfully deliver Range Rover levels of quality, driveability and breadth of performance in a more compact, more sustainable, package."
The cash is coming from the Government's Grant for Business Investment scheme, and is separate to the support package the automotive sector as a whole, including Land Rover, is seeking from the Government.
"We welcome the Government's support for this project, which would form a key part of our future product plans and which we very much want to put into production," said Popham.
Land Rover said the project still has a number of "approval gateways" to negotiate before confirmation, but the car is expected around 2011.
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