Tata is likely to pay about $2bn (£1bn) in the deal, although analysts will be keen to see the exact price and terms.

The agreement will bring to an end a lengthy sale process which started last June when Ford announced its intention to sell the companies as a package.

Tata is India's biggest vehicle maker, with more than half of the sub-continent's truck market.

Tata also has about 20% of India's car market.

Jaguar and Land Rover have plants across the West Midlands and Merseyside, that employ about 16,000 staff.

The car workers union, Unite, has said that Tata was the preferred bidder for the company.

BBC business editor, Robert Peston said: "Tata will commit to following an existing five year plan to invest in and develop the car manufacturing businesses. "

"Jaguar and Land Rover require hundreds of millions in investment over the next few years.

"And returning Jaguar to profitability will neither be easy or without risks," he added.

Robert also said that, to reassure the workforce, Ford will inject £300m into Jaguar and Land Rover pension funds.

Jaguar losses

In January, Tata launched the world's cheapest car, the Nano, priced at $2,500 (£1,250).

By contrast, the starting price for Jaguar's latest sports car, the XF is more than £32,000 ($64,000).

Ford has never given any details about Jaguar's financial performance.

But it is thought that Ford has invested about $10bn in Jaguar since buying it in 1989, for $2.5bn.

Despite that investment, analyst say that Jaguar has never made a profit for Ford.

However, Land Rover has been profitable under Ford's ownership.