Britain's plans to grant tax relief to producers of videogames have been approved by the European Commission.

The EC said the plans were in line with EU state aid rules and it follows an announcement made by Chancellor George Osborne in the 2012 Autumn Statement.

Videogame groups campaigned for years on the issue with trade industry body TIGA leading the way for seven years. The tax break - which should have come into force on April 1, 2013 - offers developers up to 25 per cent tax relief on four-fifths of their costs.

TIGA said the campaign had been long and arduous. He said the industry had to overcome delays, indifference and opposition from certain global publishers, changes in government policy, and a EU Commission investigation before finally achieving what it described as a resounding victory.

Richard Wilson, TIGA's CEO, said: "This is no mean achievement. Firstly, game developers in many countries receive tax breaks for games production.

"No such tax breaks currently exist in the UK and so the industry has declined. Between 2008 and 2011, employment in the sector fell by over 10 per cent and investment by £48 million. GTR will power growth in our industry.

"Secondly, TIGA won GTR despite the Coalition Government’s strategy of economic austerity, which is manifested in a restrictive fiscal policy. Thirdly, TIGA, working with MPs and MSPs of all political parties, convinced the Coalition Government to change course. Fourthly, working with the UK Government and the EDGF, we have addressed the EU Commission’s initial concerns and opposition to GTR."

TIGA says the decision will lead to an estimated £188 million in additional investment for the UK’s game developers over the next five years, and generate £172 million in new and protected tax receipts to HM Treasury.