Money comes from the EU and the Welsh assembly

It is thought that west Wales and the Valleys could be eligible for hundreds of millions of pounds from the European Union's regional aid programme.

The current round of funding, known as Objective One and worth �1.2 billion, is due to come to an end in 2006. The extension would run to 2013.

As the European Union expands to 25 members in May 2004, taking in poorer countries from the east, Wales will become wealthier compared to the rest of the EU.

Poorest areas

As a consequence, it had been thought that Wales would be less likely to get the grants - which are intended to help improve the economies of Europe's poorest areas.

However, it is thought that Wales could still eligible for a form of Objective One funding.

To be eligible for the new level of grant the poorest parts of Wales would need to remain statistically under 75% of the wealth of the 'Old EU' of 15 members.

The Commission says it is its intention for the average payment to west Wales and the Valleys over seven years from 2006 to be 74% of current Objective One handouts - beginning at 85% in 2007 and tapering down to 60% in 2013.

It wants to provide temporary support for regions who would otherwise lose out because of the 'statistical effect' of the enlargement of the EU.

Eastern parts of Wales could also receive lesser forms of EU aid over the same period.

Any funding from the EU will have to be "matched" by equal funding from the Treasury which is why there will now be further debate in Wales and at Westminster on the European Commission's proposals.

The ultimate decision will be made by the European Council of Ministers, which includes the UK Government.