FINANCE Secretary John Swinney has promised to fund most of the cost of a rates relief scheme for shops hit by the tram works.
Council chiefs are understood to be on the verge of offering to waive all business rates for traders who prove they are suffering hardship because of the disruption.
And Mr Swinney confirmed the Scottish Government would meet 75 per cent of the co
st of such a scheme.
Shopkeepers along the tram route have complained their takings are being badly hit by roadworks. Traders in Leith Walk and Constitution Street have claimed they are losing up to 90 per cent of their incomes.
And two shops at the West End said they were forced to sell up after Shandwick Place was shut for the tram works.
Currently, lump sum compensation packages of up to £4000 are available to some traders and a 20 per cent reduction in rateable values has been agreed for businesses with an RV below £28,000.
But earlier this month council officials were ordered to investigate the possibility of 100 per cent rates rebates.
The issue was raised in the Scottish Parliament by Edinburgh North & Leith Labour MSP Malcolm Chisholm, who highlighted the "severe hardship" being suffered by traders.
Mr Chisholm wanted to know whether the Government's 75 per cent contribution was automatic or subject to ministers' discretion.
He said: "If relief is not granted it may well be some traders will go out of business altogether."
But Mr Swinney told MSPs: "If the city council comes to the Government with such a proposition, the Government is duty bound to provide 75 per cent assistance.
"The test for hardship relief is a very clear test which the assessor and the council must consider and the Government will act accordingly."
Mr Chisholm called on the council now to go ahead and implement the relief scheme.
He said: "That's the biggest help business could get," he said. "Reducing the rateable value is making a small difference and the lump sum grants are only going to certain businesses, but this is the action which can help everyone."
Mr Chisholm said in the long term, businesses as well as residents would benefit from the £512 million tram scheme.
But he said: "That doesn't take away from the fact there are short-term difficulties which have to be addressed."
SNP Lothians MSP Shirley-Anne Somerville called on TIE to use a £96m contingency fund currently earmarked for infrastructure overruns to help businesses affected by the trams works.
"That would go some way towards making amends for the inadequate compensation package put in place by TIE and the previous Labour administration."
Council leader Jenny Dawe said a report on the matter was due at the next council meeting on May 29.
She said: "We have been listening to the concerns of traders affected by tram works and are keen to do all we can to help them through this difficult period. The 100 per cent rebates scheme is perhaps one way to ease the situation."
