New York/Rome  - The Italian car manufacturer Fiat and US- based Chrysler were discussing a strategic partnership, according to reports Monday in the Wall Street Journal and the trade magazine Automotive News.

Under such a deal, Fiat could gain access to the US market for its small and mid-size cars, fulfilling a long-standing wish by the Italian company to get an affordable foothold in the US, the reports said.

In particular, the Fiat 500 and Alfa Romeo are being singled out in the talks, the Wall Street Journal reported from Rome.

In exchange, Chrysler would tap Fiat's experience building small and medium-sized cars to advance its own plans for new front-wheel drive vehicles with lower emissions.

As gas prices soared and the economy tanked, sales of Chrysler's mostly large and inefficient automobiles fell 30 per cent in 2008.

With auto sales at their lowest in 27 years, Chrysler has laid off tens of thousands of workers and had to beg for a government rescue to the tune of 5.5 billion dollars to stay afloat amidst the year- long recession.

Chrysler is owned by the private US investor Cerberus, which has an 80 per cent stake acquired from the former owner, Germany's Daimler, which still holds 20 per cent. Daimler would like to sell its remaining stake to Cerberus, but the two cannot agree on price.

In a related development, Cerberus was reported to be preparing to cut nearly 10 per cent of its worldwide staff, the Wall Street Journal reported. (dpa)