The Abbott government has made a u-turn on car industry funding, reversing a $900 million cut in order to ensure two years more vehicle production.

Industry Minister Ian Macfarlane has put off a plan to close the Automotive Transformation Scheme until the end of 2017 or the car industry stops production.

The ABC is reporting that no more than $100 million will flow through to the car industry as part of the scheme before it closes.

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The move has been put down as an attempt to sure-up Prime Minister Tony Abbott’s support inside the party, which survived a spill motion 61-39.

The fund cut reversal was not aimed at keeping three car makers – Ford, Holden and Toyota – in Australia, but to make sure their suppliers operate Holden and Toyota’s slated 2017 shutdown.

Concerns have been raised that supporting industries in car component manufacturing will suffer heavily with the closure of large car factories.

Mr Macfarlane released details of the plan on Tuesday in Adelaide alongside SA Senator Simon Birmingham.

“We won’t be proceeding with the cuts that were in the budget to the ATS,” he said.

“The scheme will continue to 2017.”

Asked whether it was a reflection that the government couldn’t pass the legislation in the Senate, Mr Macfarlane said “no”.

“It is a reflection that we want the car industry up to the day that Holden closes its doors.”

Mr Birmingham, said “this is a ‘responding to circumstances’ situation”, while answering a question whether the decision was because the government’s cuts to the ATS were being blocked in the Senate.

The bill that would have slashed the $2 billion scheme by $900 million passed the House in October but has not proceeded in the Senate.

Opposition Leader Bill Shorten said the move was not to be believed.

“I do not believe for one minute that the Liberal-National government in Canberra has changed its mind, they’ve just changed their tactics because they are worried about their own jobs,” Mr Shorten said.