The UK Film Council's distribution and exhibition fund has launched its much-anticipated initiative to co-fund a nationwide network of digital screens.

The National Lottery-fund scheme will invest £13m in setting up 250 digital screens. The screens will be located in approximately 150 existing cinema sites around the country, over a quarter of UK cinema sites.

The council is setting up a central independent consortium later this year to operate the circuit. In return for providing cinemas with technology, the Council is looking to earmark a certain proportion of screening time for showing specialised films.

"For years the problem in growing the specialised sector has been haunted and governed by the 35mm paradigm, " said Peter Buckingham, head of the distribution and exhibition fund.

"Making prints or copies of films is very expensive, creating a chicken and egg situation. The supply of films to cinemas and audiences is limited because there is no proven demand and demand is restricted because there is restricted supply of films. In this new landscape, specialised cinema can now react fully to the market and have the flexibility to grow a market alongside 35mm. This scheme is open to every exhibitor and distributor who is interested in growing, or is already working in, the specialised film sector."

The scheme aims to encourage wider distribution on a broad selection of films as part of the council's aim of developing the audience for film. Cash will also go to creating cost-effective digital copies of films.