REGIONAL development agencies One NorthEast and Yorkshire Forward are to be strengthened by a package of measures unveiled in the region yesterday, which will give them more flexibility over how they use their funding.

But in return, the agencies - RDAs - will have to meet more stringent targets.

Deputy Prime Minister John Prescott and Chancellor of the Exchequer Gordon Brown set challenging targets for all the RDAs, at a meeting at the Cellnet Riverside Stadium, Middlesbrough.

The aim is to create an environment in which economic development can be balanced equally across all regions, with all parts of the country sharing in the created prosperity.

The development agencies will be given more power to set their own budget priorities, tackling local problems.

One NorthEast and Yorkshire Forward have been allocated a total of almost £363m funding.

Yesterday's announcement comes as a welcome boost to the North-East, which appears to be slowly turning the tide of job losses into a steady trickle of job creation. The number of jobs created in the region since the start of the year outnumbers those that have been lost.

The news in January that Nissan's operations in Sunderland would build the new Micra, rather than Renault in France, was a massive boost for the 4,000 staff at the Sunderland plant and thousands of associated jobs in the supply chain.

The resurgence of shipyards on the Tyne and the Tees, with more than 1,000 new jobs, is also welcome news for an industry that appeared to be in terminal decline.

But there are still hundreds of workers who have lost their jobs since the start of the year.

British Steel's Teesside operations have been hardest hit, with 770 jobs going as part of a national shakeup.

The tide of job losses could turn further with the measures introduced yesterday, which were welcomed by Dr John Bridge, chairman of One NorthEast.

He said: "The new measures announced confirm additional funding for the agency which was promised in last year's Comprehensive Spending Review.

"We have now been given total flexibility in the way we spend our budgets, allowing us to regulate and direct funds at the priorities established in the Regional Economic Strategy - just as we wanted.

"We welcome the targets drawn up by the Government."

John Cridland, deputy director general of the Confederation of British Industry, said: "We are very pleased that the Government has decided to give RDAs more flexibility over how they use their resources.

"The new measures will go some way to enabling RDAs to spend according to particular needs in their regions.