Liverpool could host the 2007 eisteddfod

After a new report revealed festival debts of �111,000, Alun Pugh said it should not expect "blank cheques".

Mr Pugh also said the eisteddfod needed to modernise "to maintain its appeal".

A decision on whether the eisteddfod will be held in Liverpool in 2007 has been postponed by organisers until talks in August.

I would rather not have an eisteddfod at all than go to Liverpool... all the Scousers would be laughing at the Gorsedd Outgoing archdruid Robyn Lewis

The Eisteddfod Council met on Saturday, the day after a report by auditors Grant Thornton to the Welsh Language Board showed its debts.

The council heard that a new arrangement could see all 22 local councils give �20-25,000 to the eisteddfod annually.

Speaking on BBC Wales' Maniffesto programme on S4C, Mr Pugh said the eisteddfod was still important in helping achieve the assembly government's goal of creating a bilingual future for Wales.

But he added: "I think everybody need to understand there's no question of blank cheques or bailing the eisteddfod out indefinitely".

Culture Minister Alun Pugh says eisteddfod's appeal must broaden

"The eisteddfod already receives a substantial amount of public funding. Last year it received half a million pounds.

"I read the Grant Thornton report over the weekend and look forward to discussions in the future".

Patagonia

Mr Pugh said also that the eisteddfod should look to modernise to "maintain its appeal in the 21st Century to all parts of Wales and indeed further afield".

There is a huge Welsh community in places like Liverpool R Alun Evans, president, eisteddfod court

But Robyn Lewis, who has just stepped down after three years as archdruid, again criticised a suggestion that the festival could go to Liverpool in 2007.

"I am hopeful it won't have to go to Liverpool now," he said.

"I would rather not have an eisteddfod at all than go to Liverpool because it would be lost in Liverpool. All the Scousers would be laughing at the Gorsedd."

Dr Robyn Lewis was archdruid for three years

But Dr R Alun Evans, president of the eisteddfod court, said: "There is a huge Welsh community in places like Liverpool, in the west Midlands, even in London, as far away as Patagonia, and, who knows, in the future we may get an invitation to hold the annual eisteddfod in Patagonia."

On Friday, the leader of the Welsh Local Government Association (WLGA) Alex Aldridge issued a statement on behalf of all council leaders unanimously reaffirming their commitment to securing the long- term future of the eisteddfod.

At present, the only offer to stage the 2007 event has come from Liverpool City Council, but the idea of moving it to England has proved controversial.

On Friday, the eisteddfod was told it needed to find an extra �188,000 a year to balance the books, despite recent savings and increased sponsorship.

Last year, the eisteddfod received �160,000 from the board and the assembly government to avert a crisis.