PLANS to restart services on a cash-strapped heritage railway next month have been put on hold while administrators delve into its affairs.

Meanwhile, a new business plan aimed at saving the Weardale Railway, in County Durham, from liquidation is being studied by the three main funders of the project and administrators PricewaterhouseCoopers (PWC).

A decision on this is likely to be made in the first two weeks of March.

Ian Green, senior partner with Leeds-based PWC, said: "Talks are ongoing with the various stakeholders in Weardale Railway Ltd, all of whom are very keen to see the project succeed.

"But, given the financial position of the company, the stakeholders, unsurprisingly, have concerns about its overall viablity and it is these factors that the administrators are examining."

PWC will continue to maintain the railway and retain four of the original workforce of 36, who were made redundant when the company went into voluntary administration with debts of more than £1m just after Christmas.

The four retained workers, all involved in maintenance work, will, however, be made redundant at the end of this month, leaving only volunteers to work on the railway.

The three main funders examining the new business plan for the railway, which was successfully launched in July last year, attracting nearly 14,000 passengers in a short summer season, are One NorthEast, the Government Office North-East and the Heritage Lottery Fund.

All have expressed their support for the railway, but only One NorthEast has so far given any financial aid.

Donald Heath, vice-chairman of Weardale Railways Ltd, said: "If the new business study demonstrates - as it should - that there is a viable project, then it ought to be possible to reach an outcome which allows the railway to run under the aegis of the company."

But he added: "Whether or not trains run in 2005 is a matter entirely in the discretion of the administrators. Whilst the current directors can exhort, cajole or persuade, at the end of the day the decision is not ours to make."

The fate of the railway may finally lie in the hands of the Weardale Railway Trust, which operates separately from the company and has seen its membership mushroom from around 350, when the line opened last summer, to nearly 1,000.

At a series of emergency meetings, trust directors have pledged their continuing support for the project and have started work on fundraising projects.

A trust spokesman said the railway "has already had a terrific impact on helping to regenerate the dale by demonstrating it is a key player in the bid to build a prosperous tourist industry here."

But he added that harsh lessons have to be learned.