Honda Racing has applied for a Government bail-out to save its beleaguered Formula 1 team, it has been revealed - meaning that if it does succeed in making the starting grid for the Australian Grand Prix in two months' time, it will be British taxpayers who have enabled it to do so.

The Guardian newspaper reports that the Brackley-based outfit - which, CEO Nick Fry claims, has been in talks with as many as twelve interested parties regarding a potential purchase - has approached Lord Mandelson in an effort to secure some of the ?2.3 billion aid and support package for the car industry that the Labour Business Secretary unveiled earlier this week.

There has been persistent uncertainty about the future of the squad - which employs some 700 people at its Northants base - since parent company Honda in Japan shocked the motorsport world in announcing last December that it was to withdraw its funding with immediate effect, a legacy of the global credit crunch and resultant falling car sales.

The team is alleged to have spent almost ?150 million in 2008 for a meagre return of just one rostrum finish, 14 points and last position but one in the F1 Constructors' World Championship. A spokesman has now confirmed that it has held discussions with Lord Mandelson's Department for Business, Enterprise and Regulatory Reform (BERR) 'on several occasions over the past month' regarding the new loan guarantee scheme.

"There is no reason why Honda Racing couldn't apply," a BERR spokeswoman told The Guardian. "We expect any company in the automotive industry or in its supply chain with a turnover of ?25 million or more to qualify [for the loans] if it has a viable project to deliver the objectives of the support package. All applications will be considered on a case-by-case basis."

The government's four vital criteria for a successful bid are said to be that the applicant has an annual turnover in excess of ?25 million, is at the cutting edge of innovation, is committed to reducing carbon emissions and will create employment. In the light of F1's new energy-saving drive, Honda Racing would qualify on all four counts.

Though it was earlier claimed that should a buyer not be found by the end of January, the team would close its doors for good, recent statements suggest this is not the case, and that Honda F1 is still 'optimistic' of being ready to race Down Under in Melbourne on 29 March [see separate story - click here].

Major car makers such as Jaguar Land Rover are also understood to have approached BERR, with one suggestion that a 'wage subsidy' be introduced whereby employees in the industry would work shorter hours instead of redundancies being made.

However, adds that 'as the recession bites, if the car industry, like the banking industry, is bailed-out, this will set a worrying precedent which will leave the government unable to say no to least until the pot runs out'.