"Talks have been held. We are at the stage of assessment now," Jahangiri told Iranian state television on Monday.

The MG Rover Group collapsed on 8 April after its failure to form a joint venture with China's state-owned Shanghai Automotive Industry Corp.

The collapse entails an embarrassing loss of jobs for Prime Minister Tony Blair, who is facing a general election on 5 May.

"After MG Rover announced bankruptcy, naturally many carmakers offered to buy it. As an important carmaker, we announced that we wanted to study buying it," Jahangiri added.

Iran Khodro, the Middle East's largest carmaker, has said it is not interested in buying MG Rover, but Saipa, Iran's second-biggest, is interested.

Jahangiri's comments were the first official confirmation that Iran is considering making a bid for the British company.

"Our auto industry is capable of reforming a troubled European carmaker and presenting it to world markets under the same brand," Jahangiri said.


The minister said the outcome of the talks would depend on the conditions set by MG Rover.

Iran's hardline media opposed the idea of buying the company when it was first reported in the press on Saturday. The daily Kayhan questioned the wisdom of trying to save a bankrupt company.

In 1967, Iran bought the rights to manufacture its own version of the British Hillman Hunter. Renamed Paykan - or arrow - the four-cylinder car has been travelling the roads of Iran for nearly 40 years.

But Tehran has announced that production of the Paykan will stop soon.