A new tax break for film-makers will help ensure Britain remains an international centre for movie-making, ministers said yesterday.

Details of the scheme, which will enable producers to claim up to £4m a film in tax relief, were announced by paymaster-general Dawn Primarolo after months of negotiations between the Treasury and the industry.

Film-makers were dismayed earlier this year when the Inland Revenue announced that it was bringing to a close the so-called section 48 tax relief scheme amid claims that it was being abused.

Some investors were said to have been pouring money into projects to secure a quick tax return - with little expectation that the films would ever reach cinemas.

Ms Primarolo said the new scheme would build on the success of section 48 in encouraging investment in British films while being less open to abuse.

"This new, more generous relief will ensure that the UK continues to be recognised as one of the best places in the world to make a film," she said.

The new tax relief incentive will enable producers to claim up to 20% of their costs, up to a budget of £20m.

The relief will be paid on completion of the film to limit the scope for abuse.

The announcement was broadly welcomed by John Woodward, the chief executive of the UK Film Council.

"Obviously, as with section 48, the new tax credit will take a few months to bed down, but it is extremely good news that the new relief will apply to 100% of the film's costs - rather than just the money spent in the UK."