An extra subsidy "pot" of £200,000 a year for Welsh language newspapers and magazines has been announced by the Welsh language minister.
Y Byd's plans are now in doubt
Rhodri Glyn Thomas said it could be used for a daily paper or "strengthen the sector" including online material.
But it is well short of a £600,000 grant which backers of plans for a first Welsh daily Y Byd (The World) had hoped for, to cover their first year.
The Welsh Books Council will administer the money over the next three years.
The assembly government is pledged in the coalition agreement between Labour and Plaid Cymru to increase funding for Welsh-medium print "including the establishment of a Welsh-language daily newspaper".
But Y Byd's plans are now in doubt following the news that much less public cash will be available then had been anticipated in the business plan for the daily newspaper.
A recent review, for the Welsh Language Board, concluded its viability had not been proven.
The announcement will provide £200,000 a year until 2011.
Mr Thomas told AMs that this was in addition to the £173,000 which is spent through the Welsh Books Council (WBC), on Welsh-medium news and current affairs publications.
Mr Thomas told AMs he had asked the WBC to "invite applications from those interested in the field".
He said applications could be "in relation to establishing a daily newspaper or new developments to strengthen the existing weekly news provision, to strengthen the sector including material on the internet".
Details will be announced "in the near future".
Y Byd's backers Dyddiol Cyf have yet to respond to the minister's statement.
They had warned the review that the venture would fail without a decision on public support soon.
The plans for the newspaper, unveiled last summer, are also based on the assumption of substantial income from advertising placed by the assembly government.
Dyddiol Cyf said it would aim to cover Welsh, UK and international news, attracting 5,000 subscribers for the planned launch in March.