A restructuring programme at a leading North-East university is paying dividends.

Annual accounts published by Newcastle University showed that income last year rose by 8.4 per cent to £249.7m, with a surplus of £6m.

Bursar Howard Farnhill said: "This has been a very successful year for the university in financial terms.

"We need to keep growing our income if we are to remain financially successful and 2003-04 provides a good base to work from."

Funding Council grants rose by more than £9m to £89.5m, academic fees increased to £44m and research grants and contracts brought in £55.5m.

The university's Enterprise Centre, set up to help students start their own businesses, is also proving a success.

Ten companies are still trading after their first year, and another 14 start-ups are in the pipeline.

The report reveals how the non-profit making organisation has benefited from the controversial overhaul carried out by its vice-chancellor, Professor Christopher Edwards, that included shedding 300 jobs.

Prof Edwards arrived from Imperial College London in 2001. He set about improving Newcastle's financial position, cutting 300 jobs through voluntary redundancy and early retirement.

He also streamlined its 75 academic departments into 27 schools and created nine research institutes.

The cost-saving measures saw income rocket from £189.3m in 2001 to £255.6m last year, a rise of 35 per cent.

"In terms of annual growth, we are now at the top of the league table of comparable institutions," he said.

"We have every intention of continuing this trend in the years ahead."

Staff levels have also gone up to 4,514, meaning Newcastle now employs 150 more people than it did before the job cuts in 2001.

Wages remain the university's biggest expenditure, with staff costs rising from £123m last year to £134.3m, more than half its total income.