The company has been buffeted by the falling sales and credit crunch, and has sought help from the British government ensure continued supply of credit.

The agreement reached on Monday safeguards the shopfloor jobs of over 800 hourly-paid workers and 300 salaried staff at JLR plants at Castle Bromwich, Solihull and Halewood.

The deal reached with JLR management will now be recommended for acceptance in a workforce ballot of around 12,000 workers over the next three weeks.

A JLR statement said: "Following several constructive meetings between the company and trade unions, agreement has been reached on a number of proposals to reduce costs and avoid the need for compulsory redundancies at Jaguar Land Rover.

"In recognising the urgent need to achieve cost reductions for the business in the light of the credit crunch and the significant drop in sales, the unions will now recommend acceptance of the proposals in a ballot of members at all Jaguar Land Rover facilities, which will be held shortly."

"We have reached a temporary framework agreement to offset costs in order to avoid the need for any compulsory redundancies," Unite union national car industry secretary Dave Osborne said.

We are hopeful that our members will vote to accept this deal on the basis that it is a temporary agreement for a two-year period which will give the company time to get through this very difficult period and come out of it stronger, he added.

"These have been very difficult negotiations and at the forefront of our minds has been the need to save the jobs of our members. We are in a crisis here through no fault of our own. The workforce has been a huge asset to the company in the past and will continue to be so in the future – we are pleased that we have been able to reach this agreement," Osborne said.