Redundancy notices are being sent to around 5,000 MG Rover workers, following the collapse of the company.
Around 1,000 staff are being retained to complete work on unfinished cars, but more redundancies could follow.
The government has announced a £150m support package for those who lost their jobs and for an estimated 12,500 people in affected subsidiary firms.
Rover's fate was sealed when talks with a potential Chinese investor, Shanghai Automotive Industry Corp, collapsed.
'Terrible shame'
Administrators will now decide the future of the company's assets - including the MG sports car brand.
Its 400-acre site at Longbridge in Birmingham will be mothballed.
Chancellor Gordon Brown said the £150m support package would include more than £60m to help diversify industry in the area and to support MG Rover's supply chain.
In addition there would be £50m to fund retraining and re-skilling of workers made redundant and £40m ploughed into statutory redundancy payments.
He said every Longbridge worker would be interviewed over the next week to be told about retraining opportunities and details of 26,000 job vacancies in the West Midlands.
Sir Digby Jones, director general of the Confederation of British Industry, said that firms had been ringing him to say they were crying out for skilled workers.
"Although this is a very sad day, I firmly believe it will be a day of rebirth rather than one of death," he said.
BBC business correspondent Nils Blythe said the administrators would also be examining the accounts to trace where the company's money went.
On Friday, John Towers, the head of the Phoenix Venture Holdings group that bought Rover from BMW for £10 in 2000, said: "We feel completely devastated. But our feelings are nothing compared to the feelings of the thousands of people who were employed here and their families."
Tony Blair said the collapse of Rover was a "terrible shame", and added: "What we now have to do is look after the workforce and the families of the workforce."
Conservative leader Michael Howard said he welcomed the support package.
Charles Kennedy, leader of the Liberal Democrats, said the government should have acted sooner to try to secure MG Rover's future.
(BBC)
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