The move snuffs out any hope of renewed production at MG Rover’s Longbridge plant and will be humiliating to the government which failed to secure a deal with the Chinese.

This weekend redundancy notices went out to the 5,000 Longbridge workers and Tony Blair refused to condemn MG Rover’s directors who have pocketed £40m in salary and pensions.

The cut-price offer will be made to Shanghai Automotive Industry Corporation (SAIC) this week by administrators acting for the troubled Midlands car group.

SAIC rejected a joint venture with MG Rover as a going concern on Friday, fearing it would be held liable for hundreds of millions of pounds of redundancy and pension payments if the British company collapsed.

Last year it bought several key pieces of intellectual property from MG Rover in a £67m deal. It owns the blueprints for the Rover 75, MG Rover’s latest model, the Rover 25, its small car, and the K-series engine which powers Rover vehicles.

These rights would enable the Chinese to make Rover cars eventually but the group does not own the production lines. Car industry experts said last night that SAIC was the obvious buyer for the production facilities, which the administrators plan to mothball.

Patricia Hewitt, the trade secretary, has ordered an inquiry by Sir Bryan Nicholson, chairman of the Financial Reporting Council. In a sign that the government is worried about a possible accounting scandal at the company, Nicholson will examine the books of MG Rover and all its associated companies.

It emerged last night that the trade and industry select committee will also investigate Rover, including money that the government has given the firm and its role in backing the Phoenix consortium bid over a rival plan by Alchemy Partners.

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