PEUGEOT are expected to announce in the coming days that they will supply their three litre Formula One engine to the Alain Prost owned Ligier team in 1998.

The announcement will mark the end of Eddie Jordan's exclusive agreement with the French engine manufacturer, but sources close to Jordan say the news in not detrimental to the team.

"There had been talk of Peugeot withdrawing altogether from F1 at the end of next year and now that is firmly off the agenda," a spokesman said.

"The position with Jordan and Peugeot next year is simple - if the team performs there will be an option to use the engines in 1998 and if the team does not perform there is no such option." Decision time will be June next year.

Alain Prost has been negotiating for three years to buy the Ligier from Benetton boss Flavio Briatore, and the deal is now coming to fruition. Prost, four times world champion and the most successful driver of all time in terms of Grand Prix wins (51), takes over the Magny Cours based outfit this week and enters the shark infested waters of team ownership for the first time.

Peugeot entered Formula One first in 1911 and re entered in 1994 with Marlboro McLaren. At the end of their first season McLaren switched to Mercedes and the French team tied up with, Jordan.

In 1995 and 1996 the Peugeot powered Jordans finished fifth in the constructors championship but the Paris built engine has yet to win a Grand Prix.