LONDON, ENGLAND (AFP) - Britain said on Wednesday that it intended to pay up to 5,000 pounds ($10,600) towards the cost of buying a new low-carbon car, despite an austerity drive that had threatened the programme.

A total of 43 million pounds had been made available for the scheme between January 2011 and March 2012, the business department said. The budget beyond that will be decided in a spending review due to be conducted later this year.

"We are sending a clear signal that Britain is open for business and that we are committed to greening our economy. This will ensure that the UK is a world leader in low emission vehicles," Transport Secretary Philip Hammond said.

The subsidy was proposed by the former Labour government in 2009 but Prime Minister David Cameron's new coalition, which took office in May, had questioned whether Britain could afford it as it emerged from recession.

Cameron's government has imposed a series of stringent spending cuts to battle a record budget deficit.

The grant will reduce the up-front cost of vehicles complying to tough emissions standards by 25 percent, capped at 5,000 pounds.