Eisteddfod management had warned of cuts to the 2009 and 2010 festivals
This year's National Eisteddfod in Bala, Gwynedd, is to get an extra £100,000 one-off grant, the assembly government has announced.
Heritage Minister Alun Ffred Jones said the grant was needed because of problems faced in raising funds in a rural area such as Meirionnydd.
The grant is in addition to £486,000 given to the festival by ministers through the Welsh Language Board.
The eisteddfod's management had called for an extra £188,000 a year.
Last year, they warned that the event was facing a financial crisis unless the assembly government increased its grant by 40%.
It followed an independent report into the festival's finances by accountants Grant Thornton which concluded the current position was unsustainable and recommended the larger funding increase of £188,000.
Announcing the one-off subsidy, Mr Jones said that without the extra money "this year's 2009 eisteddfod will face serious financial difficulties and several of its core activities will not take place".
"Today's funding will provide greater certainty for this year's event and I wish the eisteddfod team well for a successful event in Bala this year," Mr Jones added.
Eisteddfod chief executive Elfed Roberts said: "We are delighted with the additional funding which has been offered by the Welsh Assembly Government which will mean that we can continue with the arrangements for 2009 with renewed vigour."
Conservative Welsh language spokesman Paul Davies said his party was "fully committed to supporting the National Eisteddfod and have called on the minister to give this issue full consideration for some time".
But Mr Davies warned there were "longer term funding issues which the minister has failed to address in today's statement".