Embattled US car firm Chrysler will file for Chapter 11 bankruptcy protection in the US later today after talks aimed at restructuring its debt collapsed.

According to a US government official, Chrysler failed to gain the bondholder support it needed to move forward without a restructuring.

Chapter 11 gives the manufacturer protection from its creditors and time to rearrange its finances under a court order, while allowing it to continue to trade.

The move does not mean that the proposed deal with Fiat can not go ahead.

Chrysler, which split from a union with Daimler in 2007, is owned by private equity firm Cerberus Capital Management and has received $4.5 billion in loans from the US government since the beginning of the year.