Ministers have been warned by Ford that 3,000 workers may be laid off at the firm's Dagenham plant in Essex, in addition to the 1,320 job losses already announced.
The Department of Trade and Industry is now preparing an aid package similar to the one agreed for the Rover plant in the West Midlands.
The company is expected to announce restructuring in the European arm of its business before the middle of May. Their plans are understood to include an end to car assembly in Dagenham after the output of existing Ford Fiesta models ends in November next year.
This would be the end of a 70-year link between the Essex plant and the US firm.
Dagenham Ford now employs 7,000 workers - 4,600 of them in car body and assembly line operations. The company recently said that 1,350 assembly jobs would be lost at the site in a switch to single-shift production of Fiesta cars.
With Rover's Longbridge plant facing severe cuts, the Government knows it must act to try to stem escalating problems in manufacturing.
A DTI source said yesterday: "You have seen what happened with Rover. In the face of mass job losses, we set up a task force and made money available. There is no reason why that sort of thing should not happen here."
But any moves to assist Ford are unlikely to halt criticism that the Government is not dealing adequately with intense price competition and the strength of the pound, which have undermined the competitiveness of British-made Ford cars.
Industry experts insisted yesterday that Ford must act to end long-term overcapacity in its European business.
Professor Garel Rhys, director of Cardiff Business School's centre of automotive industry, told BBC Radio 4's Today programme: "Ford does need to take pretty dramatic action in Europe to get rid of its long-term problem of over-capacity. They have about 400,000 units worth of long-term over-capacity and that is effectively more than one assembly plant."
But he warned that it would not just be Ford workers who would suffer from the plant's closure. "The knock-on effects will be looked at in the same way we look at the problem at Rover."Reuse content