Then-Prime Minister John Major welcomed LG investment in 1996

There have been calls for an inquiry after the firm was awarded tens of millions of pounds to set up in Wales in the late 1990s.

Now the Welsh Assembly Government has signed an agreement to recover part of that aid.

Economic Development Minister Andrew Davies said it was the biggest reclaim of regional selective assistance ever in Britain.

It is unfortunate that the vision for electronics development did not work out as planned but the settlement enables all to move forward Andrew Davies

Under the deal, the assembly government will be given land and buildings independently valued at �20m.

In addition LG has paid �15m cash back. After taking into account spending on buildings coming into assembly government ownership, it amounts to �34m.

The LG plant was billed as one of Europe's biggest inward investments and people living in Newport were promised that it would revive the area.

An LG electronics plant remains on the site with 330 permanent and 170 temporary employees making flat-screen televisions.

Mr Davies said the agreement was fair and "a great opportunity".

He said there had been complex discussions, and the European Commission had to be informed and consulted because it had been notified of the original aid.

'Wider responsibilities'

"We should not lose sight of the investment that was undertaken by LG Electronics Wales," said Mr Davies.

"The company undertook capital investment of �230m and at its peak some 2,000 employees were employed at the Newport site.

"I know that LG Electronics and LG Philips Displays regret as much as I do that the changes in markets and global competitiveness in cathode ray tube products led them to close the tube facility at Newport.

"The settlement agreement comes about because LG Electronics is aware of public sector assistance which it received and has also taken into account its wider community responsibilities."

'Thousands of jobs'

Earlier reports said the firm received �220m in grants. But Mr Davies said the total grant actually paid amounted to �87m.

"The assistance that the company has benefited from has to be set in the context of the thousands of jobs it supplied over the years it operated and the hundreds of continuing jobs at Newport," he said.

The land and buildings will be sold for economic development, and Mr Davies said it would be "very actively" marketed.

He emphasised that this agreement was separate from what was another development, the LG semiconductor plant.

That is covered by a separate agreement where undeveloped land has been given to the Welsh Development Agency, and the semiconductor building is also being marketed.

"It is unfortunate that the vision for electronics development did not work out as planned but the settlement enables all to move forward for the benefit of Newport and for Wales," said Mr Davies.

Regional Selective Assistance (RSA), which was awarded to LG, is a discretionary grant from the Welsh Assembly Government for businesses making investments that would create or safeguard jobs in areas designated assisted areas.

Assisted areas are places that the assembly government judges to have significant potential for development.

RSA is available to businesses of any size, for projects needing more than �50,000.