Business secretary Lord Mandelson announced the extension in his speech to the Labour Party Conference in Brighton.
The original £300m scheme, launched in May, allowed claim £2000 towards the purchase of a new vehicle if they traded in a model at least 10 years old.
‘Our scrappage scheme has been so successful the money is running out,' said Lord Mandelson. ‘The industry has asked that the scheme be topped up. Conference, we cannot do everything but that does not mean doing nothing.'
‘So today I am extending our popular car scrappage scheme with extra money for an additional 100,000 cars and vans,' added Mandelson.
The scheme, paid for jointly by the government and manufacturers, has fuelled growth in the beleaguered UK industry over the past two months.
Earlier this month, Paul Everitt, chief executive at the Society for Motor Manufacturers and Traders (SMMT), called for an extension to support the 'extremely fragile' market environment.
New car registrations in August were up 6% year-on-year, while sales are down 22% for the year so far, according to the SMMT.
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