In a preliminary agreement announced on Tuesday, Fiat is to take 35 percent of Chrysler in exchange for its expertise in making small cars. This initial stake will not cost Fiat any money.

Within the next 12 months, Fiat will decide whether Chrysler has a chance to survive as a going concern.

"If Chrysler looks like it will get through the crisis they will draw the necessary conclusions and decide what to do," the source said on condition of anonymity, confirming newspaper reports about the size and value of the extra stake.

By offering Chrysler access to its technology as well as markets overseas, Fiat is seen helping the U.S. car maker present a business plan to the U.S. government from which it needs billions of dollars in loans to survive.

In exchange, Fiat will get access to the U.S. market where it has long been absent.

Chrysler is 80.1 percent owned by private equity firm Cerberus Capital Management .

(Reporting by Gianni Montani; writing by Gilles Castonguay; editing by Elaine Hardcastle)