The deal means the Insight will come with a price-tag of £17,000 on the road when sales begin on September 1, but fleet buyers will be able to claim a £1,000 rebate to help offset the cost of the new technology.
'We are due to meet the Toyota management early next month, so our plans to support sales of the Prius are still not formulated. But we expect to be making an announcement shortly,' a spokesman told FNN. It is expected that buyers of the £18,000 1.5-litre Prius will benefit by a similar amount as applicable to the Honda.
A Honda spokesman said: 'The assistance will apply only to the launch period because funding seems to be an issue. But we have a supply problem due to high demand for the car in the US, so the support is likely to last about 12 months.'
Capable of accelerating to 62 mph in 12 seconds and reaching a top speed of 112 mph, the lightweight 1.0-litre Insight boasts combined economy of 83.1 mpg and 68.9 mpg on the urban cycle.
Jonathan Murray, head of transport projects at the Energy Saving Trust, said: 'We believe the hybrid concept is one of the most exciting developments in the clean fuel market to date. Drivers who use hybrids will have all the convenience of petrol cars while also making a large reduction in harmful emissions.'