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The Swanage Railyway Company has been awarded £1,469,000 to complete the reinstatement of a railway service between Wareham and Swanage.
The project will result in 10 direct and 40 indirect jobs by increasing the tourist offer in the area.
It's part of a big cash boost, announced by Communities Secretary Eric Pickles, for projects in seaside towns around the country.
Twenty seaside projects in England will receive grants of up to £2.6 million each from the Coastal Communities Fund to use on projects that will deliver almost 4,000 jobs, support 250 new business start-ups and create more than 1,500 apprenticeships and 400 volunteering opportunities.
The money will be used for a variety of projects, such as schemes to provide skills training and advice, plans to rejuvenate old heritage and leisure facilities and projects to help businesses embrace digital technology.
The £16million fund for the projects is raised from the Crown Estate's marine assets and reinvested in coastal areas.
Communities Secretary Eric Pickles said: "It's a missed opportunity if we don't tap into the huge potential our coastal towns have to welcome new industries and to diversify their economies so they can become year-round success stories.
"We've seen enormous enthusiasm for this Government fund and had to make some difficult choices but the projects we've chosen will create thousands of jobs and help many start-up businesses.
"This money will help these towns tap into new business opportunities that will create jobs and boost skills that will benefit the whole community."
Today's projects are the second round of this year's Coastal Communities Fund. Six projects were named last year during the first round of funding.
Next year the Coastal Community Fund will increase by £4million to £28million, a 17 per cent increase on this year. The fund is open to coastal towns across the United Kingdom and is funded by the Exchequer.