Canadian Prime Minister Stephen Harper and Ontario Premier Dalton McGuinty announced a 4-billion-Canadian-dollar (about US$3.2 billion) aid package for the country's struggling auto industry yesterday.

The two leaders made the announcement in a joint news conference in Toronto yesterday morning, one day after President George W. Bush offered a US$17.4-billion loan to the Detroit Big Three auto makers -- Ford, General Motors and Chrysler.

Canadian Federal government will contribute 2.7 billion Canadian dollars and Ontario province will contribute 1.3 billion Canadian dollars, the two leaders said.

The "short term loan" is proportionate to the Big Three's Canadian operations, which are estimated to be about 20 percent of North American production, they said.

The crippled auto industry is a "huge problem" that faces the Ontario economy and the Canadian economy by extension and it is "critical" for the governments to work together, Harper told reporters.

However, the prime minister said the aid will come with "tough conditions," adding they have no intention of providing "a blank cheque."

"Canadian taxpayers expect their money will be used to restructure and renew the auto industry in this country," he said.

The aid package will provide loan support to others along the automotive supply chain such as parts manufacturers and it will also include measures to provide additional credit to consumers, Harper said.

Canada is the ninth largest vehicle producer in the world. The auto sector is Canada's biggest contributor to manufacturing gross domestic product (GDP) and its largest manufacturing employer.

A total of 155,000 people are employed in Canadian vehicle and parts manufacturing. Besides those who work in the sale and after-market service of vehicles, close to 1 million Canadians work in the auto industry.