The investment is likely to create 800 new jobs at Sunderland, along with an estimated 2,700 further jobs in UK components suppliers and 1,300 additional jobs on the Continent.
Nissan said its British subsidiary was now likely to declare a small profit for last year, confounding management's previous forecast of losses due to the cost of re-tooling production lines for the replacement for the Primera.
A Nissan spokesman said: "That prediction now looks unduly pessimistic. Production was better than expected last year so we can take a more positive outlook." The official figures will be revealed in May.
The news reinforces the starkly opposing fortunes of UK car producers, as Ford proceeds with plans to slash 1,300 jobs at Halewood on Merseyside. Ford's share of the British market slumped below 20 per cent last year for the first time and its European manufacturing operations, hit by huge overcapacity, slid further into the red.
The decision by Nissan's Japanese management to build the new car in Sunderland came after years spent deliberating about the costs of rival plants across its world-wide empire. Only last summer Ian Gibson, chief executive of Nissan GB, had said he personally did not believe the car, a replacement for the Escort sized Almera, would be made in the UK.
The change of heart came because of recent dramatic efficiency strides at Sunderland, which have raised productivity by 10 per cent each year since 1993. Sunderland takes 10 hours to make a Primera and just 8.5 hours to build a Micra, putting the plant at the very top of the productivity league in the UK.
"We must recognise that it is through the efficiency and productivity of the workers there that we have been able to demonstrate levels of efficiency that are amongst the best in the world," said Mr Gibson.
Another consideration was the gradual revival in the European car market. Last year the Sunderland site made 231,000 Micras and Primeras, higher than the original forecast of about 215,000.