The festival has faced a financial crisis

The revelation came on the night that the 2005 festival opened in Bangor.

Minutes of a meeting held in September between the Welsh Language Board and the eisteddfod showed that there was support for declaring bankruptcy.

However, a "crisis plan" was drawn up to try to solve the �350,000 debt instead.

Documents revealing the possibility of bankruptcy were disclosed to BBC Wales under the Freedom of Information Act.

The minutes of the meeting on 9 September 2004 between the Welsh Language Board and the eisteddfod show that "some lawyers on the (eisteddfod) working committee were in favour" of bankruptcy.

The attraction of this option was that it would have allowed the eisteddfod to unlock some of its assets.

All the balances that we had built up over the years, the reserves, they had been dwindled away Hywel Wyn Edwards, eisteddfod

However, the drawback would have meant that the eisteddfod would not have been able to ask for any grants from the public purse with no guarantee that the festival could continue.

The same minutes show that "rather than declaring bankruptcy", eisteddfod leaders designed what is described as a "crisis plan".

It pledged to cut costs, saving �200,000. The crisis was further alleviated by an emergency Welsh Assembly Government grant of �80,000.

National Eisteddfod director Elfed Roberts said: "We were very close (to declaring bankruptcy). That is, we had creditors and didn't have enough money to pay them.

Hywel Wyn Edwards confirmed that bankruptcy had been considered

"If we hadn't had money from eisteddfod supporters after the president made an appeal, from the Welsh Assembly Government and the Welsh Language Board, and also the measures we applied to save substantial amounts of money, it looks likely that we would have gone bankrupt.

"So it shouldn't be a shock to anyone - because we were very close."

Hywel Wyn Edwards, organiser of the 2005 eisteddfod at the Faenol Estate near Bangor, said that the situation had improved since September.

"Things are better than they were a year ago when that was actually discussed and mooted because it would have been quite irresponsible if we had not discussed that internally," he said.

"We knew at the end of the Newport eisteddfod last year that there would have been a loss on top of the losses that were made in the central areas of the eisteddfod."