The Government will provide grant aid to support an €18 million (£14.18 million) plan by Eircom to build new telecoms infrastructure in the regions.

Eircom will use the funding to help finance the delivery of high- speed telecoms and internet services to towns highlighted as key development areas by IDA Ireland and Enterprise Ireland.

The project includes the deployment of digital subscriber lines, a technology that enables fast internet connections but which is not yet commercially available here. Eircom will finance about 60 per cent of the project's costs, with the State providing the remaining 40 per cent investment.

The Eircom project is one of 15 which will be announced within the next 10 days by the Government. It will form one of the largest awards from a €110 million, National Development Plan initiative to boost regional communications infrastructure.

The Government hopes the new telecoms projects will relieve some of the concerns of the private sector which believes the State's spatial strategy cannot succeed without the roll-out of adequate regional infrastructure.

Eircom's application for State funding is believed to be one of the largest of the proposals to be backed by the Government. The company plans to deploy fibre optic cabling, digital subscriber line technologies and internet protocol points of presence.

It also represents a u-turn for the firm which last year defaulted on a similar State-backed project. In November 2000 the Government backed a €37 million public-private partnership with Eircom only for the firm to pull out the following February. This occurred when Eircom was cutting back on its new economy ventures and had written off its investments in several firms such as Nua and Ebeon.

At the same time several other private firms, including Formus Broadband, also failed to complete State-backed projects, forcing a major shift in telecoms policy by the Government.

It is understood the latest round of grants will include just two public-private partnerships. The other private firm which is expected to get aid to build new infrastructure is the all-Ireland telecoms firm, Nevada tele.com.

Rather than funding private firms the Government will back at least 13 projects proposed by local authorities and other public agencies in this round of the National Development Plan.

These bodies have proposed building a series of metropolitan telecoms rings around towns, fibre links and establishing internet protocol points of presence. They would receive 90 per cent Government funding for the projects and would be expected to finance the remaining 10 per cent themselves.

Towns which will benefit from the full round of grant-aided projects include Letterkenny, Limerick, Galway, Ballina and Castlebar. The projects will touch on 50 towns at least, according to sources familiar with the projects.

Some 70 per cent of the funding allocated by the Government will be directed towards the Border, Midlands and West regions. The projects form part of a three-strand Government strategy which also includes the construction of an Atlantic broadband corridor in the west to link the metro rings around each town.