Deputy first minister Jenny Gilruth met with City of Edinburgh Council leader Jane Meagher this week following a tour of the site of the blaze at the former Debenhams store, which broke out on 9 July.

The funding will be administered by the council and include support for a number of areas to assist the recovery from the fire, including support to incentivise and assist with travel around the city, acknowledging the concerns of businesses facing reduced footfall after the closure on Princes Street, in particular along the tram route to Leith and Newhaven.

It will also provide assistance to help secure the site and make the building safe to facilitate the reopening of Princes Street, as well as support for festival operators forced to relocate.

On the building works front, the council said it is incurring substantial daily costs to progress work on the site, including making the building safe and the retention of heritage features, alongside associated security costs. This support will go towards covering these in the short to medium term.

Ultimately, the council will still attempt to recover appropriate costs from the owners under the Building (Scotland) Act 2003.

Ms Gilruth said: “This fire has caused widespread difficulties in Edinburgh, not just in the city centre but extending north into Leith and Newhaven, as business and commuters adjust to the disruption caused by the fire.

“The Scottish Government has been determined from the start to ensure that we are ready to support the council in assisting those affected and the funding being set out today will help to keep the city moving and to adapt, while also enabling long term recovery.

“The impact in the capital has been significant at a time when the August festivals are getting underway. The Scottish Government is committed to working urgently with partners to ensure there is the fullest possible recovery, including the reopening of Princes Street as soon as is safely possible.”

Council leader Jane Meagher added: “This is a significant step in our city’s recovery from the Princes Street fire, and I wholeheartedly welcome the Scottish Government’s announcement today.

“Whilst I remain acutely aware of the impact that this is having across the city every day, I hope that this news can bring some comfort to our residents, businesses and visitors. The city is very much open, and I’d encourage everyone to support our fantastic local businesses as the festivals begin later this week.

“We’re continuing to do everything within our power to reopen Princes Street as soon as it’s safe to do so. The complexity of the remedial work cannot be understated, with specialists working, mostly by hand, under extremely challenging circumstances.”