Around 500 people work at Ellington Colliery

UK Coal, which owns Ellington Colliery, in Northumberland, said on Tuesday it had accepted �2.1m in government funding.

A new contract has also been signed with nearby smelting plant Alcan, securing sales for another two years.

But UK Coal said on Tuesday operations at the mine would remain under review.

The company said there would also be a particular focus on manpower levels.

UK Coal said the decision to continue mining was based on reducing operating costs, a significant increase in international coal prices and more grant aid from the government.

The National Union of Mineworkers Chairman Ian Lavery said last month that Ellington had millions of tons of reserves and any closure would be caused by lack of commitment and investment.