Wolfsburg - The supervisory board of German car manufacturer Volkswagen AG has approved the basics of an agreement with Porsche to create an integrated car giant, sources close to the board told German Press Agency dpa on Thursday.

Porsche's supervisory committee, due to meet later, was also expected to approve the agreement, under which the two carmakers are to integrate in 2011.

According to the plan, VW's involvement in Porsche is to take place incrementally, with the luxury sports car manufacturer eventually to become the 10th brand in VW's portfolio.

VW chief executive Martin Winterkorn is now expected to be at the helm of both companies, sources close to the board told dpa.

Winterkorn, an ally of VW's chairman and powerbroker Ferdinand Piech, will control the management of one of the world's largest car makers.

Former Porsche boss Wendelin Wiedeking departed the Stuttgart firm's management last month, after a failed bid to take over the much larger Volkswagen.

Porsche was forced to abandon its bid to acquire VW after wracking up about 10 billion euros (14.2 billion dollars) in debt in the process.

It is also expected that in the new concern, the German state of Lower Saxony will retain its 20-per cent blocking majority, and that the headquarters of the firm will remain at Volkswagen's current seat in Wolfsburg.

The exact role of the emirate of Qatar, which had been expected to be the third major shareholder alongside Lower Saxony and the Porsche/Piech families, is still not clear.(dpa)