It's cut costs or crash 'n' burn. Can Formula One unite before it hits the road to oblivion?

At a meeting this week, the sport will either be saved from financial ruin or plunged into further chaos.

At a secret meeting in the Hilton Hotel at Heathrow this Wednesday, the big wheels of Formula One motor racing will gather for a crunch meeting. Chairing it will be Max Mosley, president of the FIA, F1's governing body. He will be flanked by Bernie Ecclestone, the boss of Formula One Administration, which owns the sport's broadcasting rights. On the other side of the table will be the heads of the 10 F1 teams, including Sir Frank Williams, founder of Williams F1, Ron Dennis of McLaren and Jean Todt of Ferrari.

The agenda will be simple and blunt: how to save the business from financial crisis.

The Prost and Arrows teams have already disappeared from the starting grid and the FIA fears that unless drastic action is taken, more could follow. Falling sponsorship revenues, soaring costs and faltering interest in the sport after last year's Ferrari whitewash make for a tough 2003 season on and off the track.

If broad agreement can be reached on ways to cut costs, the future of the independent F1 teams – Jordan, Sauber and Minardi – will be secured. But this is a big "if". In the past five years the large motor manufacturers, such as Mercedes, BMW and Toyota, have invested millions in F1. Any measures to put the brakes on the development of engines (which for a top team cost up to £120m a year) will be unwelcome.

With so much at stake, the FIA won't say publicly what's on the agenda or even where Wednesday's meeting will be held. "This is a very important and sensitive meeting, so we are being cautious. On this occasion we just can't discuss it in advance," says an FIA spokesman.

Mr Mosley is expected to take a tough line at the meeting. Last week the FIA president held private discussions with Mr Todt of Ferrari at the Italian team's HQ in Maranello. Ferrari, which has dominated the sport for three years, is unlikely to be enthusiastic about cost-cutting. But Mr Mosley is rumoured to have asked Mr Todt to support the plan.

Eddie Jordan, owner of Jordan Grand Prix, describes the spiralling costs as a "cancer in F1". He warns that on Wednesday there needs to be more than just "tinkering at the edges" of the rules.

The Irishman, who recently secured an engine deal with Ford Cosworth, says that unless engine costs are reduced, independent teams will struggle. "I fear for them because it must be like being on death row. As a team, you just can't meet those costs."

Despite this gloomy outlook, Mr Jordan thinks the meeting will be a success. "I am an optimistic person. I believe that there will be unification of the teams," he says. Of the FIA boss, Mr Jordan says: "Mosley is a highly qualified barrister. He would not risk his reputation if he did not think he could pull it off. He's cunning and has plenty of guile."

He adds bluntly that if no agreement is reached on Wednesday, "we're a bunch of buffoons".

Jordan may have secured an engine deal, but uncertainty still surrounds the self-styled "rock 'n' roll" team. With just two months to the start of the season, it is without a main sponsor, depriving the team of a potential £4m.

Minardi, the Anglo-Italian outfit, is also struggling. Earlier this year, team owner Paul Stoddart warned that the future was bleak for F1 privateers and that he was prepared to sell a stake in Minardi.

Evidence of how tough things could get for the independent teams is not difficult to find. Arrows, founded in 1977, pulled out of the last seven races of the 2002 season because it was unable to pay its engine supplier, Ford Cosworth.

Sponsored by the mobile phone firm Orange and led by Tom Walkinshaw, boss of Gloucester rugby union club, Arrows ran out of cash and efforts to find a new backer failed. It was placed in administrative receivership earlier this month.

As the 10 F1 teams discuss ways to prevent more companies going under, Arrows will be in court on Wednesday in a dispute with its creditor Morgan Grenfell over the collapse of the team. A former Arrows driver, Heinz-Harald Frentzen, is also taking legal action to recover unpaid wages.

As if this wasn't bad enough for F1, plans by the motor manufacturers to set up a rebel motor racing series in 2008, known as the Grand Prix World Championship (GPWC), are motoring ahead.

Members of the GPWC, which include Ford, Fiat, Mercedes, BMW and Renault, want a bigger slice of the commercial and broadcasting rights to F1, principally held by Mr Ecclestone.

Last year there were signs of rapprochement, but talks have since broken down. At a recent FIA commission meeting, Mr Ecclestone taunted the manufacturers, saying: "They've all got super navigation equipment in their cars; they just don't seem to have plotted which way they want to go."

Mr Ecclestone is thought to be preparing to strengthen his own hand with the rumoured acquisition of Octagon Motorsports, the US group that controls Silverstone, venue for the British Grand Prix.

Last Thursday, members of the GPWC met in Paris to discuss how best to take forward their proposals for a breakaway.

Jim Wright, commercial director of Williams, says: "We perceive this to be sabre rattling. Ecclestone has a large cake and he takes a large slice of it. As the car manufacturers have come into F1, they have wanted a bigger slice of the cake. But you have to understand that Ecclestone is a man who built this sport into what it is today. He turned it from a niche to a global sport."

Mr Ecclestone may, however, be ready to give a little. Last year he pulled the plug on F1 broadcasting via pay-per-view platforms such as Sky. His company, FOA, which took a slice of the revenues, had offered exclusive footage to the digital TV companies, but terrestrial broadcasters are now angling for this output. ITV's head of sport, Brian Barwick, is due to meet Mr Ecclestone in the next few weeks to make the case.

Says one senior F1 team source: "Bernie may be determined, but he's not stupid. He knows that it is in the best interests of the sport and his business to make F1 TV as exciting as possible."

F1 is rarely without drama. Battles off the track are as common as the ones on it. But members of F1 are beginning to pull in different directions. If agreement can't be reached on Wed- nesday, the sport could lose its way.