The review followed on from the government's announcement of extra funding for theatres of £12m in 2002/03 rising to £25m in 2003/04 - a total increase of 72% to £70m.

Mr Smith said: "This is good news for theatre. By securing additional funding in the last spending review I have been able to direct more money to one of our most under-resourced but valuable artistic assets.

"This extra investment will have many wide ranging benefits: to audiences, allowing ticket prices to remain affordable and quality to remain high; to artists, to allow experimentation and ensure a reasonable standard of living; and to organisations, so that they can invest in training and support new writing."

Mr Smith said he was particularly pleased that money had been identified by the Arts Council to invest in organisations that work with young people, the socially disadvantaged and those from culturally diverse backgrounds. "This will enable theatre to reach ever wider audiences," he said.

"I would like to thank the Arts Council for England and the Theatre Committee for this Review. It is not easy to make such delicate judgments. But I believe that this increase in funding will allow theatre in England to retain its world class status."