Cinderford' s Artspace has survived the biggest cull of theatres and galleries for decades.

The Arts Council will continue to fund the community project which faced the prospect of being dropped in a major national shake-up.

Although it did not get all the money it asked for, Artspace did survive a review which sent shock waves through the arts world.

Last week more than 200 theatre companies, galleries and arts venues were told that their funding will be stopped in 2012.

Artspace was one of 849 regularly funded organisations forced to re-apply to the Arts Council to stay on their list.

The number of projects in the national funding portfolio was reduced to 695, which included 110 new additions.

Hundreds of groups elsewhere in the country are faced with closure after losing their grant but Artspace was awarded £47,600.

Director Sally Gibson said it would have been a major blow if Artspace had been crossed off the list.

"We are very relieved that we are still being funded, even though it is less than we asked for," she said.

"The Arts Council grant is the lynch pin upon which we rely to draw in other forms of funding. I think the fact that we have kept it is an indication of our quality and our reach. We are a lifeline to many, many people."

The Arts Council grant pays for the core running costs of the project which needs around £170,000 a year to survive.

Staff believe they kept their grant because they are the only project in the Dean doing what they do and they cater for so many people.

But they are worried about the future because grants were cut across the board this year and funding from other sources is also being reduced.

Staff are planning a series of fundraising events to bridge the shortfall.

"Our funding comes from lots of different sources but many of them are charitable trusts which makes things very, very difficult," said Sally who took over in January.

Dame Liz Forgan, Arts Council chairman, said the council had decided to make "strategic" cuts rather than "salami slicing" an equal amount across the board.

"The inevitable consequence of that was that we would lose more organisations," she said. "Some of them will come to us for funding in other ways, some of them will find ingenious ways to get money from elsewhere, and some of them will not survive this."

Culture Secretary Jeremy Hunt told MPs the arts had to take a "share of the pain" but said the budget reduction of 15 per cent was lower than the 19 per cent average across Whitehall.