Arts correspondent Pauline McLean on the company's troubles

The Scottish Arts Council, which has received a request for money from the national company, said a proposed merger with Scottish Ballet could not go ahead until the situation has been resolved.

Arts Minister Sam Galbraith has expressed concern over the situation and representatives of both organisations have been summoned to talks with the government this week.

The company is seeking more money

Arts council chairman, Magnus Linklater, said the problem would impede the merger proposal but expressed the hope that Scottish Opera could reach a resolution.

The merger has been seen as a means of consolidating the position of both companies after previous periods of financial instability.

But Scottish Opera has been forced to ask for more money from the SAC for the third time in a matter of years and the financial problem is the latest in a series of problems for both companies.

Scottish Opera's general manager Ruth Mackenzie, who would have overseen the merged company, resigned her post earlier this year and blamed irreconcilable differences with the board of Scottish Ballet for her decision.

The Scottish National's Party's culture spokesman, Mike Russell MSP, said the Scottish Executive should launch a wide-ranging inquiry into the funding of national arts companies in order to achieve a "long term solution" to their problems.

'Dangerously in the red'

Mr Russell, who is a member of the Scottish Parliament's education and culture committee, said: "It cannot be satisfactory that Scottish Opera is once again dangerously in the red.

"The whole point of the impending merger between Scottish Opera and Scottish Ballet was to find a long-term solution to the funding problems experienced by these national companies.