Washington - The auto industry and US government are working to avoid bankruptcy for General Motors (GM) and keep the US auto industry afloat, officials said Tuesday.

Steven Rattner, chief adviser to the Department of the Treasury's auto industry task force, said the Obama administration was "open minded" about giving more aid to GM and Chrysler, and planned to use "all the resources" of the US government to avoid bankruptcy.

The interview was published Tuesday by Bloomberg financial news service and the US financial daily, Wall Street Journal.

GM head Richard Wagoner warned that bankruptcy would be expensive, but told reporters in Washington that he hoped the economy would rebound in 2010, the Wall Street Journal reported. GM projects economic growth of 2 per cent for 2010, a "little less than (the administration's), but we hope they're right."

He said GM will need billions more in funding from the government beyond the 23.4 billion dollars it has received from the US Treasury.

"Living hand-to mouth is not fun for anybody," he was quoted as saying.

Wagoner met Monday with German Economics Minister Karl-Theodor zu Guttenberg in Washington. Guttenberg said after the meeting that GM for the first time showed a willingness to cooperate with the German government to save its German subsidiary Opel.

Guttenberg said that GM had indicated it was willing to accept a minority share in a yet-to-be-created joint operation of GM's European subsidiaries, which would create "water-tight" measures to prevent a flow of capital from Europe to the United States.

   The German federal government has repeatedly spoken against a financial bail-out, preferring a private investor or partners from within the industry, but four German states with Opel factories are seeking ways to save up to 50,000 jobs related to Opel and its supply chain.