Troy, Michigan-based Delphi has been operating under bankruptcy protection for more than three years, and like many suppliers is struggling with the shrinking United States auto market.

The person said GM is worried that the plants could shut down if Delphi runs short of cash, crippling GM's production.

The person, who asked not to be identified because the talks are private, said the talks have been under way for several weeks and may not lead to any takeover of the plants. GM has had the option to take back factories in its 1999 agreement to spin off Delphi as an independent parts supplier.

Delphi plants make thousands of key parts for the Detroit-based GM's vehicles including its top selling pick-up trucks, the Chevrolet Silverado and GMC Sierra.

The interests of the two companies remain intertwined because Delphi is GM's biggest supplier, providing more than 1,000 parts for GM pickup trucks.

GM shares slipped 2 cents to US$2.82 in morning trading Monday.

Delphi has been operating under bankruptcy protection since October 2005.

New reorganisation plan

It was forced to redraw its reorganisation plan after a group of investors pulled out of a deal last spring that would have allowed it to emerge from court protection.

Attorneys for the company have said that it needs to re-examine its plan in light of the significant turmoil that has hit the capital markets, the auto industry and the overall economy since its last revision on October 3.

The company last week asked a bankruptcy judge to allow it to cancel health-care and life insurance benefits for 15,000 current and future salaried retirees, citing the steep downturn in the overall auto industry in recent months.

The talks with Delphi come as GM executives work day and night assembling a plan to show the federal government how the struggling auto giant can become viable and justify up to $13.4 billion in government loans.