A MAJOR breakthrough in the fight to reopen a railway was announced yesterday with news that One NorthEast is to contribute £130,850 towards a £500,000 rescue package.

The deal, in which the money will be paid through the County Durham Economic Partnership, should help relaunch the debt-ridden Weardale Railway, in County Durham, and remove much of the uncertainty surrounding the line.

Although it went into administration in January with debts of £900,000, including many thousands owed to local businesses, there was such strong support for the venture that public organisations including regional development agency One NorthEast, Government Office North-East, County Durham Development Company and local authority partnerships worked behind the scenes to ensure its survival.

With a new operating company, Ealing Community Transport, it is included in another key strategy for Weardale's revival - a multi-million pound eco-village planned for the redundant cement works site at Eastgate.

Kevin Hillary, acting chairman of volunteer group the Weardale Railway Trust, said last night: "This is the best news we have had all year.

"There are a lot of people who have had faith in the Weardale Railway. It's now up to the new company, which will run the railway, to repay that faith.

"We are now just a step away from restarting train services in the dale and carrying on to play a central role in the regeneration of Weardale."

John Hamilton, chairman of the Upper Weardale Task Force, said: "The railway is an integral part of our overall regeneration strategy and a vital strand in the economic revival of Weardale.

"On that basis, it is right that public money should be paid to ensure its survival."

Bosses at One NorthEast had withheld the payment until they were convinced the line had a sustainable future.

The railway appeared to be a success when it opened, bringing in thousands of visitors and setting tills ringing in the dale's shops and pubs.

But it soon hit the buffers when £1m grants from the Heritage Lottery Fund and Government Office North-East were withheld because of doubts over its viability.

With claims of overspending, supporters had to submit a new business plan based on the line carrying 40,000 passengers a year and operated by only two paid employees, instead of the 36 taken on to open the venture.

Even now, nothing can be finalised without the agreement of creditors, including dozens of local businesses.

They are expecting to be offered 25p for every pound owed, as administrator PricewaterhouseCoopers tries to broker a Creditors Voluntary Arrangement.

John Holmes, One NorthEast's director of regeneration and tourism, said: "The previous problems of Weardale Railway are well documented, but we have worked incredibly hard with our partners to ensure that the new business plan is robust, sustainable, and will deliver for the people of Weardale.

"We are confident that the new arrangements will mean that a viable heritage line can now be operated, attracting tourists and providing a link to existing and future visitor attractions in the dale."

Weardale MP Hilary Armstrong said: "Through my discussions, I was confident that a way through the problems could be found and that a business case could be made."

Councillor Brian Walker, chairman of the County Durham Economic Partnership, said: "I believe that, in the long term, the railway and the visitors it brings to Weardale will be good for local businesses and help with our shared plans for the on-going regeneration of one of England's loveliest dales."