A fireworks concert brings the 2006 Festival to a close

The Scottish Arts Council pledged �200,000, while the Scottish Executive is to contribute a further �150,000.

Edinburgh City Council has also agreed to contribute �350,000 towards the costs of this year's event.

Culture Minister Patricia Ferguson said the executive was also considering how to ensure the festival's longer-term financial stability.

Two years ago a cash crisis was averted after Event Scotland and Edinburgh Council provided emergency funding.

Ms Ferguson said the funding for the 2007 festival demonstrated real commitment to the event.

International competition

She added: "It is important that we consider the festival's longer term financial stability with the director and other key stakeholders, as recently recommended in the Thundering Hooves report.

"We are closely examining the report's recommendations about future support for all of Edinburgh's festivals to ensure their longer term survival and international competitiveness."

The report, by international consultants AEA, compared the city against more than 20 other festivals across the world.

It warned that Edinburgh's status as a festival city was under threat from international rivals.

Chief executive of the Scottish Arts Council, Graham Berry, said the EIF's 2007 programme offered opportunities to reach out to a wider audience.