Newcastle City Council has voted to halve its funding for art organisations, scrapping £1.2m of core arts grants in favour of a new £600,000 fund.

The final details of the fund were agreed by council leader Nick Forbes, Arts Council chair Sir Peter Bazalgette and North East Regional Council chair Joe Docherty on Monday, and voted by the full council at its budget meeting on 6 March.

It had to make £100m worth of savings for the 2013/14 financial year.

Newcastle-based charity Community Foundation Tyne & Wear and Northumberland will use its fundraising expertise to grow the fund with help from individual donors and businesses.

Bazalgette said the Arts Council recognised the financial pressure Newcastle City Council was under and appreciated being consulted on the development of the new fund.

"But, of course, a 50 per cent cut to the culture budget still means serious economic and social impact for Newcastle and beyond."

The council is pursuing a partnership with Newcastle University to generate savings from shared services.

Forbes said: "The value of arts and culture to Newcastle has never been in doubt; what has been in doubt is the funding to support them. This new approach not only provides that security, but means those who wish can also make a contribution."