With up to 10 new models planned for the Mini range, BMW will invest the money to help boost production capacity at its sites in Birmingham, Oxford and Swindon.
The announcement was made during a visit to the Oxford factory by business secretary Vince Cable. He said: 'BMW's ambitious plans for Mini will ensure its UK sites at Oxford, Swindon and Birmingham remain at the centre of Mini production worldwide.
'The investment of 250 million in addition to the 500 million last year demonstrates BMW's commitment to the UK and safeguards jobs for the future.'
However, BMW also revealed that it was considering setting up 'satellite production' of the Mini at sites outside the UK. The company is in discussions with Nedcar a part of Mitsubishi to look at the possibility of using its Born factory in the Netherlands. Nedcar will have spare capacity following Mitsubishi's decision to cease production of the Colt supermini from next year.
BMW says, though, that the Oxford factory will remain at the centre of the Mini production process. Board of management member Harald Krueger said: 'Just as Munich is the centre of the BMW world, Oxford is and will remain the home and the heart of Mini.'