Gigha was put up for sale in 2001

The money, part of �4m raised to complete the deal, was repaid to the Scottish Land Fund on Monday.

Since the community buyout two years ago, the population has increased by nearly 25% to 121. The number of pupils at the school rose to 13.

Those living on the island, off the west coast of Scotland, have launched six new firms and four dairy farms have new tenants.

In addition, plans are being drawn up by residents for Scotland's first community-owned wind farm.

It would earn the Gigha Heritage Trust as much as �100,000 per year.

We're out here in the Western Isles where hardy men survive and I think we'll do it Willie McSporran Gigha Heritage Trust

Trust chairman Willie McSporran said raising the money had been "a remarkable achievement".

Speaking on BBC's Good Morning Scotland programme he said: "I always said that from start to finish, with the odd raffle and tea party we would manage it."

He said the islanders were determined "to show the world" they could run Gigha effectively as they were "built of the right stock".

"We're out here in the Western Isles where hardy men survive and I think we'll do it.

'Beacon hope'

"We've got it, we've paid it and now it's ours."

The population would perhaps celebrate with "a wee bit of dancing in the hall tonight," Mr McSporran said.

A suitcase full of cash ready for payment

George Lyon, the MSP for Argyll and Bute, said the islanders had achieved more in two years of communal ownership than in the previous 50 years under feudal ownership.

Mr Lyon said they would send "a beacon of hope" to other communities harbouring similar ambitions.

"There is a role model that they can run their own affairs and help the community prosper, thrive and provide opportunities for young people," he added.

Homes are being constructed after a period of 34 years when only one new house was built on the island.

'God's Island'

New companies are moving onto Gigha, including the award-winning Hebridean Toffee.

Gigha is the southernmost island of the Inner Hebrides, accessed by a 20-minute ferry journey from the Mull of Kintyre.

It is often called God's Isle, a rough translation of the name "Gudey" given to it by the Vikings.

The community raised �4m to buy the island when it was put up for sale by businessman Derek Holt in 2001.

The 110 residents set up a community trust to bid for the land, securing �3.5m of lottery funding in the process.