MOSCOW, March 30, 2009 (AFP) - Prime Minister Vladimir Putin said Russia would on Monday offer hundreds of millions of dollars to help its heavily indebted biggest carmaker AvtoVAZ.

"Today we are discussing and will take a final decision about the size of financing for AvtoVAZ, so that the company can pay the bills for its suppliers and debts," Putin said, according to Russian news agencies.

"We are discussing a figure that is higher than 20 billion rubles (888 million Singapore dollars)," the powerful prime minister told workers on the factory floor at the company's base in the central city of Tolyatti.

The company's management had requested 26 billion rubles (765 million dollars) in state help.

Television pictures from the factory floor in Tolyatti showed Putin, dressed in a black suit and shirt without a tie - chatting with the plant's worried workers.

"We have come here to solve this question. It's about giving money directly to get out of this situation that has come about with debts," he said. AvtoVAZ has debts amounting to over 40 billion rubles (1.2 billion dollars).

The car maker, which was set up with Italy's Fiat in the Soviet era and is now 25-percent owned by Renault, briefly shut its production line again in early March amid a dispute with suppliers.

It produces the Lada car, Russia's best known auto brand.

AvtoVAZ is the key employer in Tolyatti, a city of 700,000 people on the Volga River in the Samara region and was named after an Italian Communist leader.

The Russian car industry, which until last year had excited investors as the fastest growing car market in Europe, has been hit by a plunge in demand as Russian consumers tighten their belts amid the economic crisis.