A miner looks for work

To allow Britain's coal industry to compete in the reformed market, the government is planning a two year state aid package, said Mr Byers.

He could not give a figure for the aid but did not rule out it reaching �100m, subject to European Commission approval.

MPs heard that a "stricter consents policy" for gas-fired power stations was introduced in October 1998 to address "distortions" in the energy market.

Since then 15 new gas-fired power stations had been refused the go-ahead.

Mr Byers said the energy reform programme was now almost complete, with new electricity trading arrangements due to be in place by October.

"As soon as this has been achieved I will lift the stricter gas consents policy," he told MPs.

"It will provide for full competition in the electricity market by allowing new entrants to challenge existing players."

"This will ensure electricity prices remain as low as possible to the benefit of all consumers, including businesses who need low electricity prices to compete internationally.

"It will enable new power station developments to go ahead if these are viable in the reformed market," he said

Shadow trade spokeswoman Angela Browning said she welcomed Mr Byers' "U-turn" on gas-fired power stations and said the policy preventing their development should never have been introduced.

She called on Mr Byers to question in Brussels the �3bn annual subsidies paid by France, Germany and Spain to their coal industries.

Mrs Browning accused the trade secretary of running a "piecemeal" energy policy and asked him to explain why coal merited a subsidy while other industries such as shipbuilding did not.

"What would be the rationale between subsidising coal and not shipbuilding?"

Liberal Democrat trade spokesman Vincent Cable asked what effect the lifting of the moratorium on gas-powered power stations would have on the government's Kyoto summit carbon emission targets.

Threat to pits

RJB Mining, which owns 13 of the pits left in Britain, had been threatening to close Ellington in Northumberland, Clipstone in Nottinghamshire and Selby in Yorkshire.

The lifeline would enable RJB to proceed with its five-year 25.5m-tonne supply deal to American owned Drax power station in Yorkshire.

Ian Lavery of the National Union of Mineworkers said he was glad that other companies such as Tower Colliery and Celtic Energy would be helped as well as RJB, and that this could be the first step towards a coherent energy policy.

Britain did not subsidise the coal industry at all last year, but the government was understood to have sought assurances from the commission that it would not block the grant.

Mr Byers's announcement coincides with the publication of research which has found that former mining communities continue to be dogged by unemployment, sickness and poverty a decade after the collapse of the coal industry.

A study by the Joseph Rowntree Foundation concluded that affected areas are still in desperate need of greater government and EU support.

Experts looked at regeneration initiatives in the Rhondda Cynon Taff district of South Wales and Mansfield in Nottinghamshire.

The research indicates that although environmental projects have cleared much of the dereliction caused by mining, regeneration agencies have been unsuccessful in rejuvenating training, employment and business opportunities.

It also reports that many people within the communities are being recruited for low-paid work in non-unionised workplaces.

It concludes that coalfield areas need greater support from both national and EU programmes for social and economic regeneration.