German media funds in their current form have little chance of survival, despite a change of government and yet another late reprieve.

The funds have been a popular way of raising capital for film, allowing investors to offset losses against personal income tax.

But it was clear that they were a lucrative tax loophole. And analysis from fund specialist Stefan Loipfinger's Fondstelegramm fuelled criticism that the media funds were invested almost exclusively in US projects.

It was a loophole that Finance Minister Hans Eichel - who will shortly leave the government - proposed to end at midnight last night.

But his cabinet motion was vetoed by a Green Party colleague.

Had the proposed 15b clause to the Income Tax Code been accepted, media funds as they operate now would not have been able to accept any new investors from today.

But the blocking of the move looks likely to be little more than a stay of execution.

There is wide cross-party support for the plan to end the tax breaks, which Eichel had calculated could bring the German state an additional $645m (Euros 550m) rising to an additional $2.5bn (Euros 2.1bn) in 2008.

What isn't clear yet is what will replace the reforms or how the transition to a new system will be handled - concerns that led to the veto from Environment Minister Juergen Trittin.

During the recent election, incoming conservative Chancellor Angela Merkel promised to "close tax loopholes" and to cut back the tax relief models" and to "abolish the lucrative loss allocation possibilities."

Her party's media policy spokesperson Bernd Neumann told film producers earlier this year that "the goal must be to have fiscal parameters which are comparable with elsewhere in Europe" to attract private capital into the German film industry.

"It doesn't have to be the funds in the form as they have existed until now, but something must come in their place. Otherwise we won't have any chance at all of keeping the film industry competitive," he said.