An "historic" deal will see hundreds of new jobs created after General Motors announced it will invest £125m in the UK's Vauxhall factory.

Fears that Ellesmere Port plant, Merseyside, would be shut down under the GM's restructuring plan will be laid to rest after the motoring giant said it was to build the next generation of Astra models at the plant. The move will see 700 new jobs created as well as a £1bn investment into the UK's car component industry.

Vauxhall chairman Duncan Aldred called the deal "ground=breaking" and "historic" after the company said it would double the content of UK components in the cars, which would in turn create a further 3,000 jobs in the supply chain.

"This is great news for the Ellesmere Port plant, our employees, the local community, our suppliers, the Vauxhall brand and the UK," he said. "We have been able to develop a responsible labour agreement that secures the plant's future."

GM's decision to award the Ellesmere Port plant with the contract means around 2,100 existing jobs will be saved, while, in a change of fortune, it has been rumoured the sister plant in Germany could face closure.