WASHINGTON/DETROIT - In the latest blow to Toyota Motor Corp, U.S. safety regulators opened a formal probe on Thursday into problems with the brakes of the Prius, the world's top-selling hybrid and a vehicle that has powered the automaker's reputation for fuel-efficiency.

The Nikkei newspaper reported that Toyota would recall an estimated 270,000 units of its new Prius in the United States and Japan to fix the brake problem.

Toyota spokesman Mike Michels said he could not comment on that report. He said the automaker had no plans to suspend sales of the Prius as it did with eight other models recalled for a faulty accelerator pedal.

There is no plan for suspension, Michels said.

No confirmation of a recall for U.S. at this time, he said in an email to Reuters in response to a question about the Nikkei report.

The U.S. National Highway Traffic Safety Administration said it had no comment on the report and said that any recall would be announced by Toyota.

NHTSA said it has received 124 complaints about momentary braking problems after motorists rolled over bumps or potholes with the third-generation Prius.

Four crashes were alleged by motorists to have been caused by the problems, NHTSA said. The investigation covers the 2010 model year Prius.

We have heard about NHTSA's intention to begin investigation. Toyota will fully cooperate, Toyota spokeswoman Cindy Knight said.

Toyota changed the software controlling braking in the Prius on models manufactured in Japan from last month, a step it had not announced before Thursday.

Toyota shares dropped another 2 percent in New York on Thursday. The stock has lost 20 percent since it announced a sweeping recall for accelerator problems in late January.

The new probe of the Prius threatens to compound a consumer safety crisis that has hit Toyota's sales, financial results and reputation for quality and prompted the recall of over 8 million vehicles around the world for problems with uncontrolled acceleration.

The 2010 model Prius is a completely redesigned version of the iconic hybrid that Toyota has said is the most important vehicle in its line-up and almost a brand on its own.

Analysts and rivals say the Prius has emerged as a kind of environmental halo car for Toyota, an icon of green design with an intense following among loyalists that has lifted the public image of the whole company.

'KISS OF DEATH?'

Dennis Virag, president of Automotive Consulting in Ann Arbor, Michigan, said Toyota's revelation that it had been aware of the Prius problems for months and had worked out a quiet fix on the assembly line without notifying consumers was shocking.

It could be a kiss of death, he said.

Toyota sold almost 140,000 Prius hybrids in the United States in 2009. That represented almost half of all hybrid sales in the market.

Like other hybrids, the Prius captures the energy from braking to recharge an on-board battery to boost mileage from its gasoline engine.

Toyota Managing Officer Hiroyuki Yokoyama, who oversees quality, said Toyota had reworked a software program that controls the interaction between the regenerative braking and the friction braking systems.

On bumpy roads and on ice, the regenerative brakes appear to slip, allowing the vehicle to lurch forward before the traditional brakes engage, Prius owners have said.

This issue shows that we may have fallen short of the standards expected of us by our customers, Yokoyama said.

Late on Wednesday, Transportation Secretary Ray LaHood spoke with Toyota President Akio Toyoda, who reassured him that Toyota takes U.S. safety concerns seriously, a Transportation Department statement said.

Toyota expects costs and lost sales from its massive safety recall to total $2 billion by the end of March. The automaker's U.S. sales tumbled 16 percent in January and are expected to fall further in February. (Additional reporting by Ran Kim in Tokyo, Soyoung Kim and David Bailey in Detroit, writing by Kevin Krolicki, editing by Matthew Lewis)

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