Arts Council England (ACE) has launched a new funding system that will require all English arts organisations to apply for support as part of an 'open process'.

The current system that sees 850 organisations receive a regular contribution from ACE is to be replaced from April 2012, with bids made under the new process to be reviewed every three years. Future funding agreements will be 'tailor-made' in a bid to ensure transparency, fairness and efficiency, while ACE is also planning to move away from a one-size-fits-all approach.

The agency has outlined two new types of relationship - strategic and programme - that will guide funding decisions, with a 'large' proportion focused on the latter. Meanwhile, strategic alliances will be formed with organisations that have been identified as important to the nation's arts industry.

The announcement follows the government's spending review, which will see ACE's overall budget cut by 29.6 per cent by 2014-15, reducing its real-terms budget for regularly funded groups by nearly 15 per cent. ACE chair Dame Liz Forgan said: "While the funding cuts will have a severe impact on our budget, they will not dent the shape of our ambitions for the arts and audiences in this country.

"Salami slicing our portfolio of organisations would never have been an appropriate long-term response, regardless of our settlement. That is why a vision for the future is so important to us."