Brighton and Hove City Council has decided to donate cash to an annual gay festival for the first time.

Pride will receive £26,000 from the authority to help pay for the one-day event in Preston Park, Brighton, in August.

The money will cover staff costs for arranging the event, which has become one of Europe's largest free lesbian, gay, bisexual and transgendered festivals.

Last year's Pride attracted more than 90,000 people from all over the country and boosted Brighton and Hove's economy by an estimated £4.1 million.

Members of the Pride in Brighton and Hove Committee, which organises the event, believe they could generate even more with the birth of a Pride Week festival.

David Harvey, chairman of the committee, said: "We believe the council now feels the organisation has moved to a better legal model, a non-profit making incorporated members' organisation.

"The move away from a one-day festival to a year-long organisation will be of significant financial benefit to the city."

City council deputy leader Sue John said: "We welcome the fact Pride is now establishing itself as a not-for-profit organisation with the aim of organising events all year round.

"Pride is one of the biggest events in the city's calendar. Ninety thousand people attended last year and it is now recognised as the most successful Pride event in the country.

"At last year's Pride, £16,000 was collected in buckets with the money going to a range of groups and organisations in the city, including ones with a health and disability focus.

"Our money will help ensure a year-round organisation and the further development of the community chest, which enables many community groups to take part in Pride and other events."

Pride has also secured funding totalling almost £14,500 for the development of a fund-raising strategy, a drugs and alcohol awareness campaign in the run-up to the festival and a series of carnival workshops for the parade.

While many other similar events in the UK have foundered in recent years, Brighton and Hove's event has become a coveted showpiece.

The organisation managed to recover from debts of £15,000 and honoured almost £10,000 in grants to the voluntary sector which had not been paid out in 2002.

Pride in Brighton and Hove has now moved away from a commercial footing to a charitable purpose with a grants panel allocating funds to community groups from money raised at last year's event.

An application to become a charitable trust is with the Charity Commission and three private benefactors in Brighton have funded social economy consultants to help the organisation achieve registered charity status.

Discussions have also been under way to alter the route of the carnival parade on August 7, which this year has the theme of The Hit Parade.

Pride has a new web site at www.brightonpride.org