Firms can apply for grants of up to £50,000 between now and the end of the year on a first come first served basis.

The funding can be used for new production or packaging plants and equipment or to refurbish existing equipment. The money can also be used to promote products with increased recycled content.

Peter Webster, market development office at Wrap Cymru, said: "We are confident that the scheme will enable Welsh manufacturers to seek sources of recycled material in Wales and decrease the need for recyclable waste to be reprocessed or reused outside of Wales."

Marketing director Steve Clarke said: "Using recycled materials can bring cost savings and environmental benefits to businesses.

"Grants like these from Wrap Cymru will mean that more manufacturing companies in Wales that have concerns over cost will now be able to receive the support they need."

Successful applicants are required to provide details of the quantities of recyclate they use as a result of the investment.

Wrap Cymru said it would also help identify sources of material from Welsh processors.