The Welsh Assembly Government will gain from further budget increases.

The latest spending announcement revealed that the devolved administration will see its cash settlement grow by an average annual rate of over four per cent in real terms over the next three years.

Chancellor Gordon Brown announced that in addition to Barnett formula funding, Wales would get an extra £555 million a year.

This will take spending from its current £21 billion to £25 billion by 2007/08.

The budget for the Wales Office will remain frozen over the next three years.

Welsh secretary Peter Hain backed the "continuing major boost to public services and prosperity in Wales".

"The Welsh Assembly Government will now translate this into the further improvements in public services and investment for Wales," he said.

"I particularly welcome the additional provision which the chancellor has made for structural funds, which will enable the Welsh Assembly Government to drive forward the Objective One programme in Wales, and to implement it in full.

"Today’s settlement demonstrates that devolution is working for Wales, and that Wales is benefiting from the government's sound management of the public finances and the economy, with our unemployment rate in the first quarter of 2004 below England's."