The Italian government Thursday signaled it would continue to help Fiat SpA (F.MI) as long as the car maker safeguards jobs at home while it seeks to expand internationally.

"It is crucial that the Italian production system remains central in a project that would be supported by public incentives," Industry Minister Claudio Scajola said.

Fiat needs funds as it seeks to buy some General Motor Corp. (GM) assets - including Germany's Adam Opel GmbH Swedens's Saab - and merge them with its auto unit and Chrysler LLC to create one of the world's largest car companies.

The Italian government in February approved a EUR2.0 billion package largely aimed at helping the domestic auto sector, in which Fiat has a 35% stake, by giving drivers incentives to buy new less-polluting cars. In return, Rome said the auto industry would have to keep its plants and jobs in Italy.

Opel might close one of its plants if it merges with Fiat, a senior German official said this week, signaling that Fiat's plan to create one of the world's biggest car makers could lead to significant job cuts in Europe.

The potential alliance between Fiat and GM's European operations could result in job cuts at 14 plants in Europe, La Repubblica reported on its Web site Thursday.

Gianni Rinaldini, head of Fiat's largest metalworkers union, said that closing any plant in Italy would lead to "serious social conflict" and asked the government to hold a meeting with Fiat management as soon as possible.

Italy's industry minister said he would hold a meeting with Fiat executives and unions to discuss possible government contributions and stressed the importance of Fiat's factories to the Italian economy.

-By Luca Di Leo and Sofia Celeste, Dow Jones Newswires; +39 06 69766923; sofia.celeste@dowjones.com