Boosting sustainable development and the rural economy will be key priorities for Margaret Beckett's department.

Following the spending review announcement on Monday, it was also revealed that the Department for Environment, Food and Rural Affairs will also gain extra cash for climate change, tackling fuel poverty and improving waste management.

The department's budget will rise by around £400 million over the next three years, from £3.15 billion in 2004/05 to £3.53 billion in 2007/08.

And in keeping with the government's new focus on efficiency, DEFRA will also be required to find £610 million in productivity gains by 2007/08, around half of which will then be made available for further investment on priority areas.

"This is a good settlement for the environment and for DEFRA which will allow us to significantly increase funding for our priorities, and help to deliver a sustainable future for everyone," said Beckett.

"It will make a real difference to our work on climate change, flood defence schemes, energy efficiency and sustainable waste management.

"The settlement will also give a major boost for DEFRA's fuel poverty programme. This will help us support all those on low incomes to stay warm at home - our target is for 2010."

Among the details, an additional £95 million per year will be provided by 2007/08 to improve the energy efficiency of homes.

And £20 million per year will fund the new Waste Management Performance Reward Grant, which will be introduced in 2005 to reward local authorities for sustainable waste management.

Action will also be taken to take forward modernisation of rural delivery following the Haskins review, said the department.

Guy Thompson, director of the Green Alliance, said Beckett had "played a blinder" in getting a real terms increase in her ministry's budget.

"The devil is in the detail but we’re very upbeat about a settlement in which waste and energy efficiency play such a big part," he said.