Toyota Motor Corp is preparing a $1 billion marketing campaign to boost U.S. sales in the fourth quarter, while also expanding its line of hybrid models under the Prius name, the company said on Thursday.

The $1 billion will include a media campaign, as well as buyer and dealer incentives, including sweeteners for leasing.

Toyota President Akio Toyoda and top U.S. company executives told Toyota and Lexus dealers of the plans at an annual dealers meeting in Las Vegas, Miller said.

The $1 billion marketing and advertising plan is 30 percent to 40 percent more than Toyota typically spends in the quarter, the report said, citing a person familiar with the matter.

The plan includes subsidizing leases and loan rates, offering other customer incentives and helping pay for dealer ads, Miller said.

The plan comes as Toyota struggles with its worst downturn since it was founded in 1937 and is expecting to report a loss for the second straight fiscal year.

Toyota also plans to raise the projected resale value of its vehicles, a figure used in calculating monthly lease payments, the report said, citing dealers briefed on the plan.

Lexus is the company's luxury brand and has its own dealerships. When the Prius line is expanded by one or two models, those cars will be sold at Toyota dealerships, said Miller.

Miller did not say when the new models will be introduced.

The sales blitz and expansion of the Prius line was first reported by the Wall Street Journal.

Toyota landed three models among the top 10 sold in the recent Cash for Clunkers incentive program by the U.S. government.

Word of the media blitz comes less than a week after General Motors Corp announced its own media campaign, in large part aimed at recapturing consumers who believe Toyota and other foreign automakers make better products.

Toyota executives in Frankfurt this week said the company planned to sell 500,000 to 600,000 hybrid vehicles globally by the end of 2009.

(Reporting by Bernie Woodall; editing by Lisa Von Ahn and Andre Grenon)

Toyota Marketing