Ford said the engines would combine 'low emissions and efficient performance'
Ford has announced a �70m investment at its engine plant at Bridgend in south Wales.
The company announced that the factory, which employs 2,000 workers, will produce a new generation of low CO2 petrol engines.
First Minister Rhodri Morgan said it would secure the plant's future.
The company has invested more than �300m at the 28-year-old plant over the last five years. Capacity will increase to almost one million engines a year.
The plant is Wales' third largest manufacturing plant, behind Airbus and Corus at Port Talbot.
It currently employs 2,000 but it could see numbers rise to 2,100 although Ford was being cautious in the current economic climate.
The new engines will go into production within two years and will be among the first of a new generation of petrol engines expected to provide up to 20% better fuel economy and 15% lower CO2 emissions.
'Shaft of light'
John Fleming, chief executive of Ford Europe said: "The Bridgend team will play an important role in delivering these new engines which add an innovative ingredient to petrol engine technology and deliver a combination of low emissions and efficient performance that will be vital to meet future customer needs around the world."
Bridgend plant manager Graham Edwards said: "The new engine programme will help preserve existing jobs and skills. This has been a real team effort."
Bridgend Council leader Mel Nott said it was "excellent news" and highlighted Ford's "continuing commitment to this area and its confidence in our workforce to deliver".
You'll get good news and bad news running side-by-side and we have to face the fact that there'll be more bad news than good news
First Minister Rhodri Morgan said the decision would secure the future of the plant "well into the medium term".
He said it would mean a "very secure future" for the Bridgend factory.
The investment includes �13.4m from the Welsh assembly government and Mr Morgan said they had turned round the grant application by Ford in two months to secure the expansion.
He said the Bridgend plant will be the sole global source of the clean energy engine and it was a "real feather in the cap" for Wales.
Bridgend assembly member Carwyn Jones added: "Yet again, the plant has been successful in obtaining new investment and this is a fine tribute to the efforts of all those who work there."
Mr Morgan acknowledged this latest investment was "a bit of a shaft of light in the surrounding gloom" of recession in the motor industry.
On Monday Llanelli-based car parts plant Calsonic Kansei announced it was cutting 60 jobs, blaming the global economic downturn.
Mr Morgan added: "There will be this churn in the economy. You'll get good news and bad news running side-by-side and we have to face the fact that there'll be more bad news than good news.
"But we mustn't pretend that its all bad news when its clearly not."
He said in the face of economic recession the assembly government was striving to be more creative in its strategies although he said they could not create a market for products if its not there.
He said they were having to reprioritise and look at areas such as affordable housing and schools and hospitals where opportunities were available.
"What we are looking for is to bring forward those projects which employ the most number of people," said Mr Morgan.
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You'll get good news and bad news running side-by-side and we have to face the fact that there'll be more bad news than good news
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