Newcastle City Council is starting up a £600,000 arts fund for its theatres and arts organisations to apply to.
It comes after the council proposed to cut more than one million pounds of its arts funding in its last budget.
The Deputy Prime Minister Nick Clegg accused the council of playing politics with its decisions, but today the council said the decision made financial sense.
Councillor Nick Forbes said the money was coming from alternative revenue streams which were safe from cuts.
More top news
A look ahead at the forecast for the Tyne Tees region.
Remain or Leave? The impact on science and research in the North East
The Heritage Lottery Fund has given North Tyneside Council £164,300 towards structural surveys and paint analysis on St Mary's Lighthouse.