The Government has announced an extension to the scrappage scheme, putting in place additional funding for a further 100,000 vehicles.

The scheme's original £300 million funding, which has resulted in 227,750 additional vehicle registrations so far, was due to run out within weeks.

Lord Mandelson announced the additional funding at the Labour Party Conference. He also revealed that the criteria will change slightly. For the new round of funding, vans over eight years old will now qualify, rather than the current 10-year requirement, while for cars the scheme now applies to models registered on or before February 29, 2000 (V-registration). This is an extension of six months.

Paul Everitt, chief executive of the Society of Motor Manufacturers and Traders, said: "This is an extremely important decision that will inspire consumer and business confidence.

"It will help stimulate demand and create a bridge to a period when economic growth is strengthened and more sustainable.

"The additional 100,000 vehicles should help to counter the likely negative impacts of a return to the higher rate of VED (January 1) and the introduction of first year VED rates."

The Government has stated that the scheme will come to an end on February 28, 2010, or whenever the funding runs out, whichever comes soonest.