The European Commission has backed a restructuring plan for Poland’s ailing Gdansk shipyard which calls for a big cut in its capacity.

The Commission approved the 251m euros (£217m) in state aid granted to the shipyard since Poland joined the EU in 2004. Some of the aid is yet to come.

The shipyard was the birthplace of the anti-communist trade union Solidarity.

The yard’s new owners, ISD of Ukraine, will have to close two of the yard’s three slipways under the plan.

"As the continuous subsidies for the yard’s production since 2002 caused a significant distortion of competition on the shipbuilding market, the yard’s shipbuilding capacity has to be reduced substantially," the Commission said on Wednesday.

The decision is the result of a four-year investigation into state aid for the shipyard.

The EU allows state aid in member states only under strict conditions. The Commission can authorise such help if it is accompanied by a viable restructuring programme.

The Polish government, which has its roots in the Solidarity movement, is very satisfied with the decision announced on Wednesday, the BBC’s Adam Easton reports from Warsaw.

The shipyard enjoys iconic status in Poland, he says.

In 1980 Lech Walesa led a strike there against price rises and employee dismissals. Solidarity then became the first independent trade union in the then-Soviet bloc.

In 1989 Solidarity successfully negotiated the peaceful end of the communist system in Poland. That helped galvanise anti-communist protests across Eastern Europe.</p

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