The US Congress has made it clear that it will provide "short-term and limited assistance" to the US car makers as they attempt to restructure.
General Motors, Chrysler and Ford bosses have just finished two days of meetings with the Democrat and Republican law makers in Washington.
The breakthrough in negotiations came at the end of the second day when house speaker Nancy Pelosi ceded to President Bush's demand that any bail-out package must be funded from the $25bn set aside to fund environmental car development and retool old factories.
A series of conditions are likely to be attached to any funding, such as strict limits on executive remuneration and perks.
It is also likely that an extra condition will prevent the car makers from using any of the money, which was originally packaged to promote the development of more fuel-efficient cars, to challenge states that are implementing tougher emissions regulations.
“We will not permit any funds to be borrowed from the advanced technology programme," said Pelosi, "unless there is a guarantee that those funds will be replenished in a matter of weeks so as not to delay that crucial initiative."
This suggests that one of Barack Obama's first acts as president of the US will be to enable a much more comprehensive package. Officials are working on the current legislation over the weekend, in time for the Senate to reconvene on Monday.
Talk of a merger between Chrysler and GM as a potential solution is still circulating Washington, and Chrysler has made it clear that it could support such a move.
