First Minister Rhodri Morgan: 'Body blow'

The announcement comes exactly a year after 3,000 job losses were announced by the steel giant, devastating the industry in Wales.

Mr Morgan was spelling out to assembly members the details of how the �76m package of aid being provided by the assembly was being spent.

The rail link between Ebbw Vale and Cardiff is hoped to open in 2004, restoring the one lost 40 years ago.

Other measures unveiled by Mr Morgan include a proposed Urban Regeneration Company for the Newport area, and the establishment of a Social Enterprise Development Fund.

The other communities hit at Shotton on Deeside and Bryngwyn in Gorseinon south east Wales are also to receive financial help.

"Nothing can take away the body blow suffered by the steel-making communities of Wales with the Corus job losses announcement in February last year.

"Now there is some reason for optimism in our steel communities," said Mr Morgan, adding steel would continue to be part of the industrial framework in Wales for many years.

He said the programme he was setting out offered a new start to the steel communities, although he admitted: "There are no jobs paying Corus type wages in Newport at the moment."

Steel plants provided skilled work

The measures outlined by Mr Morgan received a broad welcome from assembly members.

However, Plaid Cymru's Economic Development spokesman Phil Williams said the rail link from Ebbw Vale to Cardiff deserved far more investment than the �7m it had been allocated.

He said �30m was needed to provide a full passenger service between Ebbw Vale and Cardiff.

He said the rail project was getting what was the equivalent to only 5% of what was spent every week on railways in the UK.

Mr Williams also said that although there were 800 new jobs in Blaenau Gwent with 1000 being promised, there had been 3,000 real job losses on top of those in the steel industry.

"Although we welcome this package, we believe there's no sense of urgency and certainly not the total budget to tackle these problems," said Mr Williams.

Under the closure plans announced on 1 February last year, the steel mill at the giant Llanwern plant near Newport is to close with 1,300 redundancies.

Further cuts are being made in south Wales at Ebbw Vale and Bryngwyn near Swansea, and at Shotton in north east Wales.

In Ebbw Vale, about half of the 800 people made redundant by Corus have found new work with the company or elsewhere.

But the rest are claiming jobseekers or disability allowance.

Two thirds of workers made redundant from the Bryngwyn plant are still looking for jobs.

A total of 1,300 jobs have been lost at Llanwern

In May last year, Mr Morgan announced a �66m aid package to help rebuild the steel communities affected by the Corus closures.

Fifty million pounds of this funding was from the assembly and a further �16 million from the UK government and European sources.

A further �26m was announced later bringing the funding from the assembly to a total commitment of �76m.

As well as the railway links the plans unveiled by Rhodri Morgan on Thursday include be a multi million pound learning campus.

And the former research and development centre at Corus's Port Talbot plant will be established as an Advanced Technology Centre.