Government's recent approval to provide funding of $63 million has given the needed push to auto Nexteer Australia to help develop and manufacture its innovative lightweight technology and create more than 250 jobs.

Nexteer Australia, the power steering and driveline component supplier, gained support from the Gillard Government's Green Car Innovation Fund and the Victorian Baillieu Government.

The company will receive $63 million in Commonwealth assistance over three years from the Fund and additional funding from the Victorian Government.

Nexteer's technology involves electric power steering systems, and lightweight steering column and drive line components - significantly reducing greenhouse gas emissions and fuel consumption. This technology will be supported by a new Melbourne Manufacturing Technical Centre.

Federal Innovation Minister Senator Kim Carr said in a statement that the project represents a major investment by a large global company in Australia's automotive supply chain and brings new manufacturing capability for the long term.

"These high technology components will drive a need for skilled labour and create new manufacturing jobs for Victoria," Senator Carr said.

Victorian Manufacturing, Export and Trade Minister Richard Dalla-Riva said the project was a vote of confidence in manufacturing in Victoria.

"Victoria will be one of the few places in the world manufacturing this world-class technology. This is one of Victoria's biggest automotive investments in two decades and will further strengthen the sector's manufacturing and export capabilities," Dalla-Riva said.

Greg Malone, Managing Director of Nexteer Australia, said Nexteer was very excited to receive the grant - the biggest awarded under the Fund to an automotive supply chain firm.

"The grant will be used to support our innovation and growth plans," Malone said.

"Our focus is to be globally competitive by utilising the local supply base and skills of the Australian workforce as key partners in this program. We see the program being able to leverage manufacturing volumes to offer Australian Original Equipment Manufacturers world‑competitive green products and technology through economies of scale," Malone said.

Senator Carr said the Government's $5.4 billion New Car Plan, which includes the Fund, was transforming the Australian automotive industry and ensuring significant co-investment from around the world.