The Arts Council has offered a grant of €170,000 to the troubled Hawk's Well theatre in Sligo.
Funding for 2005 had been withheld by the council until the theatre's board resigned in line with a recommendation in a review of its operations.
Four members of the board resigned late last year. But five others, including Sligo Mayor Declan Bree, stayed on until last week, claiming the council was pressuring the theatre to reduce its commitment to amateur productions. The five resigned after 14 local groups and staff at the Hawk's Well publicly expressed fears the theatre would close within weeks if the row wasn't resolved. They urged Arts Minister Mr John O'Donoghue to intervene. An interim board of three directors will supervise the running of the theatre until a new board is appointed.
Two of the interim directors have been nominated. Mr Robbie McDonald is the Arts Council's nominee and has worked in the arts since the '80s. He has links with Sligo Arts Centre, the Fire Station Artists' Studio in Dublin, the Leitrim Sculpture Centre, and the Triskel Arts Centre in Cork.
Ms Ita McMorrow-Leyden, who has had links with tourism and the theatre in the north-west over several decades, is the nominee of the North West Regional Tourism Authority.
Sligo County Council and Sligo Town Council will jointly nominate the third interim director.
The Arts Council is also to advertise for a full-time artistic director of the theatre.
The Hawk's Well has hosted performances as diverse the Abbey Theatre's production of The Playboy of the Western World and concerts that included members of Westlife when they were known as I O You.
The €170,000 grant is €70,000 higher than last year's contribution. But last year's grant was only half the €200,000 the theatre received in 2003.
North West Tourism chief executive Mr Paul McLoone said: "Everybody involved is happy with the offer for 2005. We assume there will be an additional allocation when the artistic director is appointed."