The loan request mirrors the one the US car industry made to Congress which last week voted a 25-billion-dollar (17.8-billion-euro) package to help Ford, General Motors and Chrysler adapt to new emissions regulations.

The money will be used to retool and adapt factories to make smaller, more fuel-efficient cars.

European carmakers see the US package as a form of disguised subsidy and were quick to call for a similar plan to ensure a level playing field in the competitive industry.

An ACEA spokeswoman said the request to the European Commission was agreed during a meeting held Friday on the sidelines of the Paris motor show.

The goal is to encourage development of new environmentally-friendly vehicles, said the spokeswoman, with a view to reducing carbon dioxide emissions, blamed for a build-up of greenhouse gases that cause global warming.

But she cautioned that details of the request have yet to be worked out.

A spokesman for PSA Peugeot Citroen said the loans would help the industry finance "very heavy investments" to modernise their factories and meet a target of 2012 set by the European Union for cleaner cars.

Under the EU rule, automakers selling new cars in Europe will have to cut carbon dioxide emissions to an average of 130 grammes per kilometre travelled by 2012, from about 145-150 grammes on average currently.

Those that miss the target would face fines for each car breaching the new limits.

The Paris motor show opened last week amid much industry gloom over the global financial crisis and the economic downturn in Europe.

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