Hanover, Germany - The German state of Lower Saxony is calling for Qatar to buy part of Volkswagen and jilt the sports car maker Porsche, sources said Friday.

In an unprecedented corporate power struggle, Porsche, which owns more than half of Volkswagen, had earlier approached the Qatar Investment Authority (QIA) to pump in funds and rescue Porsche from a reverse takeover by volume carmaker VW.

Now Qatar and Lower Saxony have had talks and arrived at "extensive agreement," sources close to the talks told the German Press Agency dpa. An alliance between them would further weaken Porsche's position, commentators said.

Lower Saxony, which owns just over one fifth of Volkswagen and effectively controls it, would welcome Qatar as a direct shareholder in the German company, rather than as part-owner of Porsche's 51-per-cent stake, they said.

The struggle involves hugely expensive options which Porsche acquired to increase its Volkswagen stake from 51 to 75 per cent.

The Gulf state could either help Porsche to win 75-per-cent control, or buy the options and leave Porsche largely powerless. Lower Saxony Premier Christian Wulff met Qatari emissaries one week ago.

Porsche, a smaller company, nearly carried off a cheeky takeover of Volkswagen last year before the recession left it gasping for life.

Volkswagen has demanded to take over the Porsche factories and brand as its price to let Porsche's family proprietors off the debt hook and keep their block of VW shares. (dpa)