EUROPEAN cash will continue to flow into the Gwent Valleys after the Objective One programme ends in 2006, if the Treasury agrees.

So far thousands of jobs have been created and safeguarded by the aid programme, which aims to regenerate relatively poor areas of Wales such as Blaenau Gwent, Caerphilly and Torfaen.

There had been concern that with comparatively poor Eastern European countries joining the EU that Gwent would lose aid after 2006.

Now the European Commission has agreed it will continue to get up to 85% of the current settlement for a further six years.

However, the move is dependent on Chancellor Gordon Brown agreeing.

The UK Treasury, which gives more money to the programme than the UK gets back in aid, wants to take direct control of the programme.

The commission says that this repatriation would jeopardise long-term planning.

Jan Royall, head of the European Commission in Wales, added: "The commission recognises that as well as supporting new member states such as Latvia and Poland, there is a continuing need to help other parts of the EU, such as areas of South-East Wales.

"This proposal, if agreed, would ensure that the funding tap would not be turned off overnight and would give Wales the opportunity to continue to make good use of the European funding that it has received so far.

"Blaenau Gwent, Torfaen and Caerphillly are making good use of their Objective One funding at present. They are doing excellent work in helping people in the local community to develop their full potential.

"More EU funding after 2006 would mean that further projects could continue to benefit local communities across the Valleys."