BMW is also to pay a reputed pounds 30m in a deal that will unravel the cross-shareholdings between Rover and Honda.
The agreement comes three months after Honda, which has collaborated with Rover for 14 years, attacked its sale by British Aerospace and said it might cancel the licensing agreements that allowed it to use engine and other technology.
Industry sources said the threats reflected Honda's anger at the deal rather than a realistic industrial appraisal, and that its working relationship with Rover had never soured.
A BMW spokesman said yesterday that the close co-operation with Honda would proceed as previously. The new contracts were long-term, covering successor models under development, and would last beyond 2000.
Three of Rover's models, the 200/400, 600 and 800, have been designed in collaboration with Honda and rely on Japanese parts.
Rover supplies panels for Honda's British-built Accord and makes its Concerto for the European market.
The mutual dependence will gradually diminish. Honda said it planned to make outer panels for the Accord at its Swindon plant, though most would still be made by Rover. Rover plans to reduce its dependence on Honda-supplied engines, which BMW has said are too expensive.Reuse content