WHEN Trevor Dunn took over the Diamond Inn in Butterknowle, a former pit village in County Durham, customers were few and far between, a sign of a widespread and sharp decline in the fortunes of village pubs. There was every indication that the empty seats at the bar could eventually see the Diamond could go the way of many other village hostelries, and call last orders for the final time.

Five years later, it is a different scene, as customers from neighbouring villages crowd around the bar. And it is not just beer sales which have been given a bit of extra fizz, the pub has also been turned into the hub of the community.

When the Teesdale village's post office closed in 1999, Trevor decided to incorporate it into the pub, joining the betting shop which already operates from a back room. Now, his efforts to transform the Diamond have seen it named as an example of how struggling village pubs can try to reverse their decline.

"We were just going to run it as a local pub and then, when I closed my betting office in Evenwood, I just transferred to a credit office in the back," Trevor says. "And I thought there was a need for a post office when the one in the village shut.

"It's all good for the community and it doesn't hurt me. When the post office shut, I thought it was another nail in the coffin of village life. When we moved here in 1986, there was a post office that had a shop, there was another shop down here and another over the road."

Of the three shops in the village, a few miles west of Bishop Auckland, one has already closed, and one of the three pubs has shut. And when the post office shut two years ago, villagers were faced with a two-hourly bus service to Cockfield to get their pensions, and use services which had previously been on their doosteps.

Like many others, the old mining village faced steady decline and villagers were concerned about how bad things were going to get, and whether the 1,500 population would be able to continue sustaining its village school and remaining businesses if things carried on the way they were.

But 46-year-old Trevor has not only given the pub a future, he has also provided a service to the community, according to villagers. "It keeps the village going," says resident Sally Ann Blackett, 37, who was one of those who started using the pub when the Dunns took over. "Before they opened the post office, we didn't have one and, without a post office, your village is gone, it dies out.

"Without a post office, without a bookies, without a pub, nobody wants to come and live in the village. You need people to come in to keep the schools and everything going. A lot of people use the pub for lots of things now."

Now, not only do the villagers make the most of their pub, people from outside Butterknowle travel into the community, not only for the services, but also the landlord himself. "He's a popular man," says Jimmy Horsman, 47, who travels in from Cockfield to use the pub. "The beer's good and it's good crack."

Trevor's son Paul, 23, runs the pub and helps his father with the bookmakers' business, which runs from a back room, taking bets over the phone using a credit service in the hours when the pub is closed.

And, with the pub closed during the day, another room at the back houses the post office, run by daughter Marie, 20, while Trevor's wife, Lilian, 43, also helps out in the bar.

The Diamond has been highlighted in the Pub is the Hub good practice guide, issued by the Countryside Agency yesterday and backed by the Prince of Wales, who launched the guide by sampling a pint at a Yorkshire Dales pub. The guide sets out ways in which village pubs can supplement income from drinkers, and so improve their prospects for survival.

Bob Chambers, senior countryside officer for the Countryside Agency, says: "What Trevor's done is a good example of what's needed in lots of local communities. In this village, they had lost their post office and Trevor has brought that into the pub.

"He's also a bookie, so essentially he's running three businesses from the same premises and that's helping keep the pub in business, it's keeping people in jobs, it's probably creating in a small way new jobs and it's keeping and providing services in the village which people want.

'Elderly people can get their pensions, people who don't have their own car can use that facility." He adds that rural communities have the same right to have services on hand as those in towns and cities, and hailed the Diamond Inn as an example to others.

"People who live in small rural villages are entitled in the same way that those of us who live in big cities are, to expect reasonable access to the facilities like the shop and the post office, and that's what the Diamond's helping to achieve by providing a roof for more than just a pub facility. It also means Trevor himself is able to derive income, not just from one source, but from three."

According to the Village Retail Services Association (Virsa), between four and six rural pubs close every week, the victims of stricter drink-drive policies, poor public transport and a general decline in trade.

Virsa director Peter Jones says Trevor's efforts are a shining example of how village services can be joined, so that, instead of them all dying in isolation, they can survive in unison.

"The pub offers an opportunity to develop other community services and that, naturally, we are very interested in," he says. "Between four and six pubs a week in the rural areas are closing, whereas in the towns and cities pubs are thriving. There is potential there and it opens up the concepts of hub-work in that the pub becomes more of a community element than an eating and drinking place.

"The rural pubs should be looking at giving a service for the locals and at attracting passing trade for food and drink. If you add a shop and post office, then there is great potential to get your business plan on a better footing."