GENERAL Motors last night scrapped plans to sell off Vauxhall to a Canadian car parts firm.
A previously agreed takeover by Magna had threatened more than 10,500 jobs across Europe.
A spokesman for GM in the US said: "The board have decided to retain Vauxhall and move forward with restructuring the business."
In a statement, Fritz Henderson, president and chief executive of General Motors, said the decision to retain Vauxhall followed a more benign business environment in Europe and GM's improved financial health.
He said: "We understand the complexity and length of this issue has been draining for all involved. However, from the outset, our goal has been to secure the best long-term solution for our customers, employees, suppliers and dealers, which is reflected in the decision reached today.
"This was deemed to be the most stable and least costly approach for securing Opel/Vauxhall’s long-term future."
Mr Henderson added: "While strained, the business environment in Europe has improved. At the same time, GM’s overall financial health and stability have improved significantly over the past few months, giving us confidence that the European business can be successfully restructured."
"We are grateful for the hard work of the German and other EU governments in navigating this difficult economic period.
"We’re also appreciative of the effort put forward by Magna and its partners in Russia in trying to reach an equitable agreement."
Both the Unite union and GM UK declined to comment following the apparent U-turn by the US car-making giant.
The deal to sell off Opel and Vauxhall to Magna had the backing of the German government, which pledged 4.5 billion euros (£4 billion) of loans.
Unite recently announced an agreement with Magna in a bid to remove uncertainty surrounding the factories in Ellesmere Port and Luton, which employ around 5,500 workers.
Both plants were given job security and a future through to 2013, providing a good basis for a long-term future beyond that, the union’s joint leader, Tony Woodley, said last month.
The deal with Magna was backed by Business Secretary Lord Mandelson, and in September he said talks had begun to discuss how much the Government would contribute.
A Department for Business spokesman said: "We have noted GM’s announcement today and want to work closely with GM to understand their plan for the business and what it means for the UK.
"We have always said that if the right long-term sustainable solution is identified, then the Government would be willing to provide funding to this."
