Prime Minister Julia Gillard said the national and two state governments would inject A$275 million into GM Holden in the latest hand out to the country's struggling auto makers to protect manufacturing jobs.

Australia's three car makers - GM Holden and the Australian arms of Toyota Motor Corp (7203.T) and Ford Motor (F.N) - have all cut jobs due to falling sales and exports, blamed on the global downturn and a record high Australian dollar, which has traded above parity with the U.S. dollar.

"It is a strategic investment that will boost our economy," Gillard told reporters, adding that GM Holden's future was secure for the next 10 years.

"It will be making cars and competing in economic circumstances where we expect the Australian dollar to be around about parity with the U.S. dollar," she said.

The funding will secure the jobs of 12,000 people employed by GM Holden's Adelaide car plant and engine manufacturing plant in Victoria, and shore up thousands more manufacturing jobs in the components sector.

GM Holden cut 140 jobs from its Adelaide car plant in February, while Toyota said in January it was cutting 350 jobs at its Australian manufacturing operations.

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The latest government figures show Australia produced nearly 250,000 cars in 2010, falling steadily from about 320,000 in 2008 and more than 400,000 in 2004.

The industry employs about 55,000 people and supports 200,000 other manufacturing jobs.

The government has been determined to keep the industry afloat and protect jobs after Japan's Mitsubishi Motors Corporation (7211.T) closed its Australian car plants in 2008.

The funding for GM Holden comes from the national government's 12 year car industry support package, announced in 2008 and budgeted at A$5.4 billion to 2020, which commits the government to co-invest with car makers to support manufacturing jobs.

"Co-investment of this kind is critical for our industry," GM Holden's managing director Mike Devereux told reporters.

The Australian dollar has traded at record highs above parity with the U.S. dollar over the past year and around 40 percent above its long term average, putting a strain on manufacturing and export industries.

(A$1=$1.04)

(Reporting By Maggie Lu YueYang; Editing by Edmund Klamann)

• A Permanent Economic Emergency