Stadco, a body parts supplier, has announced that it will not build MG TF body panels at the site as previously planned.

The move has alarmed suppliers who are now questioning the viability of the MG project.

A press statement issued by Stadco and Nanjing Automotive, which commissioned Stadco for the project, said: “Stadco and NAC jointly confirm that for commercial reasons, production of bodyshells for the MGTF by Stadco will cease.

“Both parties are working to ensure minimum disruption to the workforce.”

The statement added that: “consultations with elected employee representatives will commence immediately and every effort will be made to assist those affected by this announcement.”

Stadco confirmed the move will not have a material impact on its financial outlook.

A spokesman from the company said he was unable to go into further detail regarding Stadco's reasons for pulling out.

Meanwhile, frustration is mounting with the government-appointed investigation into the collapse of MG Rover, the Financial Times has reported.

Critics have said inspectors should issue a report soon about the accounts of MG Rover and its previous owner Phoenix Venture Holdings.

Inspectors' expenses so far total more than £11m and the investigation is now in its third year.