Car parts specialists TRW has blamed a slowdown in global car sales for the decision.

The move comes less than a month after the company announced it had secured a £1.25m grant from regional development agency One NorthEast,

The cash was earmarked for research and development work and installation of new machinery and bosses predicted the cash injection could mean up to 170 new jobs at the Peterlee plant.

But it has emerged the firm is axing 46 posts among the factory's temporary workforce.

TRW employs around a fifth of its 750-strong workforce on temporary contracts to allow it to cope with fluctuations in demand.

The company says the downturn will have no impact on its 600-plus permanent staff.

Peterlee plant manager Phil Pearce said: "The automotive industry is facing a tough period, This has a negative knock-on effect on our orders and we have had to scale back our temporary workforce.

"TRW Automotive Peterlee has been performing well in recent years – however, we have to respond to market conditions to ensure we're in a position to continue to develop our business here in the long term.

"This is a regrettable decision, one that is not taken lightly, but it is necessary to safeguard the majority of the workforce.

"We will provide all the support we can to those contract employees that are to leave the company."

TRW, based on Peterlee's North West Industrial Estate, won the Queen's Award for Enterprise earlier this year.

The safety electronics plant received the award in the category of International Trade after increasing its exports by 77 per cent during the last three years.

The One NorthEast funding was intended to be part of a multi-million pound investment for the site which first opened 20 years ago.

Bosses have predicted they will spend around £13m within the company and said Peterlee would be at the centre of that as part of plans to expand its electronics sector.

TRW makes car seatbelts and electronic control units which are used to inflate airbags.