Eariler this year, the UK film industry basked in the success of Bridget Jones's Diary, which had Britain's most successful movie opening in April.

It was shot in Britain, produced by the UK's Working Title Films, and was distributed by two major US studios - Miramax and Universal.

What is a British film?

92.5% of film's running time must be created in UK The rest of the film must be made in a Commonwealth country or Ireland Most of the labour costs must go to UK citizens Film must be made by UK (or other European) registered company Source: 1985 Film Act

There is no doubt that distributors played a big part in the film's success in America. It jumped three places to the top of the US chart after opening on 600 more screens than in the previous week.

Other UK films have also done well commercially in the US, including Oscar-nominated Billy Elliot, Notting Hill, The Full Monty, Four Weddings and a Funeral and Trainspotting. They all also had US distributors.

And the UK film industry has continued to build on this - last year's film production was up by a third, thanks to movies such as Harry Potter and the Sorcerer's Stone, 51st State and Tomb Raider.

But for every British film achievement, there are plenty that do not break even financially, and do not find their way into foreign film markets.

Film Council funding 2000-2001

Education (BFI grant): �16m Inward Investment: �1m Film Production Franchises: �15m Development: �5m Premiere: �10m New Cinema: �5m Training: �1m First Movies: �1m Export Promotion: �0.2m

British films are created by relatively small production studios which do not have the resources to distribute and market their work.

To secure distribution in cinemas in Britain and abroad, they have to convince distribution companies - of which the biggest are all controlled by US studios - that their films are worth showing.

But even when they succeed and the films make money, a lot of the profit goes to the distributors, with no guarantee that it will be reinvested in British film.

Last year, former Culture Secretary Chris Smith set out to address this by setting up the Film Council, which is funded by the National Lottery and the Treasury.

Billy Elliot: Another UK success story

It replaced various institutions, including the Arts Council, which had poured millions of pounds into domestic films with only limited success.

Two clear aims stand out - to develop a sustainable UK film industry, and to encourage film culture by improving access to, and education about the moving image.

The council hopes to achieve its goals through distributing funds to film-makers and by offering training to those working in the industry.

Between 2001 and 2002, the council has �57m at its disposal, with �20.8m from government grant-in-aid, and �36.2m from the lottery.

Who do the new funds support?

Development: Quality screenplays with commercial potential New Cinema: New talent and explores new technologies Premiere Production: Popular mainstream films Training: Scriptwriters, executives, producers and distributors First Movies: Low-budget short films, gives children the chance to learn about film-making

This may sound a lot, but given that Disney spent a record �136m on its animated extravaganza Dinosaur, the council's money obviously has to go a long way, and must be spent wisely.

The council's spokesman, Ian Thomson, said part of the problem with the industry was that UK film-makers tend to "shy away" from commercialism.

But he was quick to point out that getting US distribution did not necessarily make or break a film - there are many film territories worldwide where UK movies could be shown.

He also stressed that if a film was not an instant financial success, it did not automatically mean it was a failure, despite recent media reports slating movies funded by lottery money.

Kate Winslet's Hideous Kinky did not break even

"The commercial value of a film is a long-term process measured over several years," he told BBC News Online.

"It is not just about the box office - some films are much more popular in the video and DVD market, and that is where they make their money."

But the government is using more than the Film Council to try to boost the UK film industry.

Chancellor Gordon Brown's March Budget announced that tax relief for film production in the UK will be extended until April 2005.

Who does the Film Council work with?

British Film Institute: Deals with educational and cultural issues Scottish Screen Northern Ireland Film Commission Sgr�n

The tax relief was first introduced by the government in 1997, and it is estimated that in 1999/2000 approximately �500m of film production was generated through it.

And in 1997, Chris Smith announced that three "mini-studios" funded by �92m would produce a total of 90 films by the year 2003.

The moves have so far produced a significant rise in the number of films being created.

It now remains to be seen as to whether they recoup the money invested in them.