The leader of the National Assembly for Wales, Alun Michael, is facing what could be a make or break period.

On the first day back since the festive break, Plaid Cymru confirmed their threat to table a no confidence motion in Mr Michael in a row over European funding.

Around £1.2bn of Objective One money has been earmarked to help regenerate deprived areas of Wales - but only if Mr Michael can get enough Treasury money to match-fund the Euro cash.

Prime Minister Tony Blair has repeatedly promised that he "will not let Wales down" over match funding.

No guarantee

But the Labour administration at the Welsh Assembly has said there can be no guarantee of full match funds ahead of the comprehensive spending review expected to be completed in July.

Opposition parties are demanding that the money is found now.

Ieuan Wyn Jones, the acting leader of Plaid Cymru - the largest opposition party at the Assembly - said: "Tony Blair has found extra money for the NHS ahead of the comprehensive spending review.

"But the Government has told us we will have to wait until the CSR before it can commit extra funds. It just depends what importance it is regarded with in Number 10.

"We need two guarantees. Firstly, all the money which has been allocated to Wales must be over and above the block grant. It must be new money.

"And secondly, in the first year of the programme there should be enough match funding available for us to draw down all of the money to spend on the projects we will commit to in the first year of the programme.

"If we do not have those guarantees, there will be a vote of no confidence in February."

'Uncomfortable but right'

With the threat of a no confidence motion looming calls have been made for a coalition Government.

But Mr Michael played down the idea saying he wanted to create a mature and "inclusive" Assembly instead.

"We are trying to do it in an inclusive was which invites the other parties to play their part," he said.

"We are seeking to work with all parties across the Assembly and create a very mature and inclusive Government.

"It is uncomfortable, but it also happens to be right."

Mr Michael also faced another European row, over a leaked report criticising the Assembly's spending plans.

The report by the European Commission criticised the Assembly's plans for spending grant aid as weak and lacking vision.

'Excellent progress'

It forced Labour on to the defensive though Rhodri Morgan, the Assembly's Economic Development Secretary remained upbeat.

"There is no question in my mind that we are making excellent progress," he said.

"This is absolutely par for the course, it is totally what we expected.

"We're not behind the game, we are ahead of the game, I give you my promise."

Labour have also faced criticism from their own ranks with former Welsh Secretary Ron Davies, attacking the party's attitude to the Assembly and handling of European funds.

And there could be more trouble from Mr Davies in a speech on devolution.

As he faces up to his first question session on Tuesday Alun Michael knows that issue of European funds will dominate the coming weeks.

Leadership

The theme running through all the policy issues is the question of who really runs the Assembly - the minority government or majority opposition.

Welsh Liberal Democrats have already predicted a coalition government in the National Assembly within two months as a possible solution to the deadlock in the Assembly between Labour and the opposition.

And the influential Institute of Welsh Affairs has also criticised Mr Michael's leadership.

A report published before Christmas called for more equal power-sharing.