SHIPYARD workers will discover later this week whether a cruise liner contract will be sailing to the UK, guaranteeing hundreds of jobs in the North-East.

The £344m contract with luxury American shipping company Luxus, would see two vessels built by Cammell Laird - the group sharing the work between its yards on Tyneside, Teesside, Merseyside and Gosport.

But the deal for the 28,000-ton 400-berth luxury liners, remains dependent on Government subsidy from the Department of Trade and Industry, which yesterday agreed to provide a grant from the shipbuilding intervention fund.

Although the DTI said it would release a £25m Government grant, Cammell Laird and Luxus are still awaiting a decision on a loan guaranteeing up to 80 per cent of the cost of the contract, a figure of around £300m.

Regional organiser for the GMB union Kevin Rowan said: "We strongly welcome the DTI decision to agree to the grant from the shipbuilding intervention fund, but we also need a decision on the home shipbuilding loan guarantee.

"This fund underwrites the cost of the contract for those investors in Luxus, and we believe Luxus needs that investment guarantee.

"The problem appears to be that the DTI have given no indication as to whether or not it will underwrite the cost of the contract, and a decision is needed by the end of the year."

Unions and management at Cammell fear that if no guarantee is given then Luxus may decide to take its cruise liner contract to another shipbuilding group on the continent.

Only last week Cammell's Merseyside yard laid off 250 workers because of doubts over a £51m contract to upgrade an Italian cruise liner.

The Costa Classica was heading for the Birkenhead yard last month when it suddenly turned back amid claims from the Italians of delays in the work. The Department of Trade and Industry said in a brief statement: 'Trade and Industry Secretary Stephen Byers today announced that officials have made conditional offers of shipbuilding intervention fund grants to Cammell Laird of around £25m in support of its contract with Luxus for two luxury cruise liners.''

The announcement brought confusion amongst union bosses at the GMB who believed the Government should have offered more than £25m.

But the DTI said the Government was offering the full amount being sought by the company.

''Cammell Laird is fully satisfied with the amount of grant offered, and that is what really matters,'' said a DTI spokesman.

The DTI confirmed that a decision on home shipbuilding loan credit guarantee scheme is expected by the end of the week.