Washington  - The US government moved during the New Year's holiday to free up more money for auto loans and to start the emergency infusion of billions of dollars directly into the industry to keep it afloat.

While Chrysler Corporation was still waiting for its money on Friday, General Motors has received 4 billion dollars of the 13.4- billion-dollar lifeline promised by US George W Bush late in December, Bloomberg financial news service reported.

Meanwhile, the US Treasury this week released guidelines for how it could help other parts of the auto industry, the Detroit Free Press reported.

GM faced a shortfall of cash within days after the direct loan was finalized on Wednesday.

On Monday, the US Treasury Department started moving to free up auto loans by committing 6 billion dollars to supporting GMAC LLC, the financing arm of General Motors Corp. The move will enable the largest US carmaker to contribute to the financier's reorganization as a bank holding company.

GM owns 49 per cent of GMAC, which is a critical source of financing for car sales.

Under the terms of the 13.4-billion-dollar direct loans to the car industry, GM can claim 9.4 billion dollars and Chrysler LLC gets 4 billion dollars over December and January.

GM could get another 4 billion dollars in February.

The federal funds come with tough conditions. GM and Chrysler will have to prove they can return to viability or the money could be withdrawn by March 31, likely leaving no option other than bankruptcy.

The money will come from the government's 700-billion-dollar financial rescue package, which was initially reserved for financial institutions, but is now propping up lenders, the car industry and finance companies.

Car sales have plunged some 40 per cent in the past few months as consumers struggled to get loans in the current financial crisis, adding to the woes of an industry that has already been struggling to keep up with more fuel-efficient and cheaper foreign competitors. (dpa)