Pensioners whose council tax bills have jumped are to receive help

OAPs whose homes have moved up more than one council tax band under rebanding are to receive an extra �100.

Extra money is also earmarked to help pensioners improve their heating and there are more funds for education.

Parties had been in talks for almost two months as the assembly government no longer has a working majority.

The new agreement was reached after late-night talks involving opposition party leaders and the Labour assembly government.

A statement from the assembly government declared the talks had been "an instructive exercise for all those involved which has been carried out in a spirit of give and take on the part of everyone".

Small schools

As well as the one-off council tax payment of �100 for pensioners affected by the council tax rebanding, an extra �10m over two years will go to help OAPs improve the efficiency of their home heating.

Around �5m is to be spent cutting the gap in spending between universities in Wales and England in the first year, with a minimum of another �3m in year two.

It shows the value of all parties working together where there is common cause Ieuan Wyn Jones

There will also be a �4.1m fund for small schools across Wales and on schools in general.

It includes a commitment to pre-feasibility studies to improve railway services throughout Wales, plus buying extra rolling stock for the Aberystwyth-Shrewsbury and Heart of Wales lines.

Mike German, leader of the Welsh Liberal Democrats in the assembly, said the draft budget put their priorities "at the heart of government spending once again".

"We have always placed a high priority on education and the concessions we have secured on the small schools fund and closing the funding gap in higher education are an outstanding addition to our proud record."

Plaid Cymru's leader in the assembly, Ieuan Wyn Jones commented: "This is an excellent deal for Wales. It shows the value of all parties working together where there is common cause to help school children, students and pensioners."

Welsh Conservatives assembly leader Nick Bourne added: "I believe this result is a budget which meets the concerns of opposition members.

"The Welsh Conservative Party has been determined to help pensioners, many of whom have suffered dreadfully from council tax rises. This budget does that."

Labour has been in a minority in the assembly since Blaenau Gwent AM Peter Law became an independent earlier this year. Labour now holds only 29 of the 60 seats.