The danger of Britain’s steel industry plunging back into crisishas eased with the government agreeing further subsidies that reduce the sector’s cripplingly high energy bills.

A deadline to win European approval to grant British steelmakers to state aid that would bring their energy bills closer to those faced by their continental rivals was missed because of Brussels red tape.

Steelmakers successfully campaigned for a 85pc rebate on their energy costs - which have been pushed up by green taxes - to bring them close to foreign competitors. Last March’s Budget set out a deal where the industry paid the green levies, but got the money back in a rebate from the Treasury.

Government budgeted for the £5m a month the rebate for steel makers requires until the end of March 2017, expecting to win EU approval to change state aid rules allowing this cost to pushed on to other consumers by then.

The arrangement meant that instead of paying the green taxes and getting refunds, the energy-intensive steel industry would not pay then in the first place.

However, EU dithering meant the January 9 deadline for the change was missed, with the next chance to get approval for state aid not coming for at least three months and possibly much longer.

With the Treasury having only budgeted for support for steel-makers until the end of March, many in the industry were worried they could suddenly see their power bills shoot up again, reigniting the steel crisis which has cost thousands of UK jobs.

However, government has now confirmed it will continue to provide the £5m a month subsidy until the EU agrees the state aid change - something which was initially expected to be a simply rubber-stamping exercise.

MP Stephen Kinnock, whose Welsh constituency is home to the sprawling Port Talbot steelworks and has campaigned for the government to support the industry, called the indecision over the funding a “toxic combination of incompetence and indifference”.

He added: “Government only every started to pay attention to the challenges facing the UK steel industry when it became a public relations disaster for them, and so the amateurish way in which they have handled this state aid process leaves us with the impression that now that steel is not on the front pages, that they no longer care.”

Gareth Stace, director of industry body UK Steel, said: “This is a huge relief for the sector and the alternative does not bear thinking about: energy costs rising even further above our competitors is the last thing we need right now. Our focus is on coming out of the recent steel crisis, which claimed thousands of job, not falling straight back into it.”

A spokesman for the Department for Business, Energy and Industrial Strategy, said: “Energy costs are an important issue for our energy intensive industries and we are committed to minimising them. We continue discussions with the EU on securing the remaining exemptions to begin the new system, and the current compensation will remain in place in the meantime.”