Officials in West Bengal hope to defuse the row over the factory by returning some of the acquired land to farmers while rehabilitating others on new plots.

Tata Motors has suspended work at the factory because of the stand-off and threatened to look at alternative sites after farmers backed by the local opposition party blocked roads leading to the plant and threatened workers.

After days of negotiations, the state's communist government and the opposition Trinamool Congress party, representing the farmers, agreed on a joint committee that would conduct the survey and return excess land around the plant to farmers.

"We are surveying the area to identify land which can be returned to farmers. We will show the government the plots," said Rabindranath Bhattacharya, a Trinamool leader on the committee.

But the move is no guarantee that Tata would begin work at the plant in Singur, an hour's drive from Kolkata.

The standoff would likely undermine production capacity but is unlikely to delay the planned October launch of the Nano, billed as the world's cheapest car, as some units could come from existing Nano plants.

The Nano protests reflect a larger standoff between industry and farmers unwilling to give up land in a country where two-thirds of the population depends on farming. Politicisation of farmers' resentment has further complicated the issue.

The Nano factory and its ancillary units were being built on about 1,000 acres of land. About 400 acres, earmarked for ancillary units, is under dispute.

Tata Motors says separating the ancillary units from the main plant would upset the project's cost calculations, and any alteration in the original arrangement was unacceptable.

"We have clearly mentioned our stand in a letter to the government, there is nothing more to add at the moment," a Tata Motors spokeswoman said on Wednesday.

Trouble began after the government acquired farmland for the factory last year. The government offered compensation which some farmers rejected, demanding that at least 400 acres be returned.

The government says it is in favour of a land-based solution for farmers but against disturbing the Tata Motors plant site.