The firm is investing £45m in a new six-cylinder, 7.2 litre engine for heavy excavators, which will be designed and built at its Foston factory.

JCB began building its own four-cylinder Dieselmax engines in November 2004 and has built more than 200,000 engines.

Extra staff will be recruited over the next two years bringing the total staff to more than 300 as production of the Dieselmax 672 steps up.

The first of the new engines has just rolled off the production line. JCB will aim to make 500 of the engines in the first 12 months, eventually rising to about 8,000.

By manufacturing its own six-cylinder engine in-house, JCB will no longer need to import engines from a Japanese supplier.

The first will be stage II compliant are will be destined for growth markets including Russia, Brazil and China

JCB chairman Sir Anthony Bamford said: “In a relatively short space of time we have become a major producer of engines and today more than 70% of JCB’s machines are powered by the engines we manufacture.

“The move into six-cylinder engine production is a historic moment for our business and a natural step to take and we look forward to setting new standards in performance and fuel efficiency.”

JCB said the Dieselmax 672 was 8% more efficient than engines previously used in its excavators.