The Italian government is considering a plan that would involve taking a major stake in Fiat's money-losing auto unit, the Wall Street Journal Europereported.
But it was not clear whether Fiat's creditors and shareholders, including General Motors (GM), would go along with such a rescue, the report added.
Sources close to the government were quoted as saying the proposal was discussed among Prime Minister Mr Silvio Berlusconi, Fiat Chairman Mr Paolo Fresco and other top Fiat executives.
The plan would see Fiat Auto detached from parent firm Fiat SpA and turned into an independent company, it was reported.
The state would then take a "relevant" stake in the new Fiat Auto, with GM, Fiat's creditor banks, and the Agnelli family taking the rest, according to a source. GM's stake would probably stay about 20 per cent, the source was cited as saying.
There was no indication, however, that any of these other parties has agreed to go along, the report said. Fiat's creditor banks said they had not been told of the proposal, the Journaladded.
A spokesman for Fiat declined to comment.
PA