Welshpool could be joined to the UK network in five years

More than �1m will be ploughed into restoring the Montgomery Canal and Monmouthshire and Brecon Canal.

Half the money will go to extend the Montgomery Canal by a kilometre between Maesbury and Redwith Bridge in Shropshire.

This means that only the eight-mile stretch between Maesbury and Arddleen near Welshpool has to be completed to link up the canal with mid Wales.

It is part of an on-going project to allow boats to navigate from England, through Welshpool towards Newtown which will cost �35m in all.

Accessing European funding pots in dribs and drabs means that we are getting closer to the plan to join up the Welsh waterway with the English network Lynn Pegler, British Waterways

If other funding bids are successful, British Waterways, which governs the UK canal network, believes the 16-mile-stretch of canal in mid Wales could be joined to the English network within five years.

The new �1.1m funding boost has come from a European programme to promote historic waterways.

"There are several blockages along the canal which provide engineering challenges that will result in the high cost," said Lynn Pegler, British Waterways' communications manager.

"But accessing European funding pots in dribs and drabs means that we are getting closer to the plan to join up the Welsh waterway with the English network," added Ms Pegler.

Opening up the canal would mean major work to the main A483 road near Welshpool because bridges taking traffic over the canal were knocked down in 1949.

The Montgomery canal is blocked by a main road at Arddleen

The Montgomery canal is a site of special scientific interest and is one the best in Britain for wildlife and aquatic plants.

British Waterways says opening the waterway has the potential to create 100 jobs and boost the surrounding economy by �2m a year.

A two-and-a-half mile stretch of the 35-mile long Montgomery canal between Queen's Head and Maesbury in Shropshire was opened in April.

The Montgomery Canal was built in 1821 and was used to carry limestone, wood and leather goods before being abandoned in 1944.

Volunteers have been restoring the waterway for the last 33 years and after �20m worth of work, nearly half the canal has been restored for navigation.

Meanwhile, a section of the 32-mile long Monmouthshire and Brecon Canal will be restored using the EU cash and a mooring basin built within a housing development at South Sebastopol, near Pontypool.