A total of �435,000 from the New Opportunities Fund means the Butterwick Children's Hospice, in Stockton, will be able to operate fully for the first time in its four-year history.

Meanwhile the Butterwick Hospice, at Bishop Auckland, has been awarded more than �750,000 to develop home-based palliative care for adult patients living in rural areas.

The funding has been welcomed by hospice chief executive Graham Leggat-Chidgey who said the money would mean an "enormous and ongoing difference".

Essentially we will be increasing the care we offer to babies and children by 50%, which is marvellous news Graham Leggat-Chidgey

He told BBC Radio Cleveland: "It will make a difference particularly for our childrens' hospice... up until today we have had no firm funding and depended entirely on the generosity of the local public.

"The �435,000 we have been awarded will enable us to, at last, fully operate our four beds.

"Up until today we've only operated two beds, and in the case of emergency, a third bed.

"Now we will be able to operate three beds all the time with a fourth bed for emergencies.

Quality of life

"Essentially we will be increasing the care we offer to babies and children by 50%, which is marvellous news."

The money for adult patients will be spent for outreach services across the Sedgefield, Wear Valley and Teesdale areas.

In addition, outreach day hospices will be developed across parts of County Durham.

Mr Leggat-Chidgey said the money would make a real difference to the quality of life of many patients and their families.