The orchestras serving Scottish Opera and Scottish Ballet are to be merged into a single ensemble as part of cost-cutting measures to rescue Scotland's national companies.
The Government, through the Scottish Office, will also inject an extra pounds 1.3m of Scottish Office funds to cover the estimated current year deficit of the four national companies.
The four companies - Scottish Opera, Scottish Ballet, the Scottish Chamber Orchestra and the Royal Scottish National Orchestra, are also being urged to share services such as administration and marketing.
The Scottish arts minister, Lord Lindsay, has endorsed these recommendations of a working group that he set up. He said this week that the four companies were the "crown jewels" of the performing arts in Scotland, but warned they would have to economise.
At present, Scottish Opera has its own full-time orchestra while Scottish Ballet hires freelance musicians. The size and composition of the joint orchestra will be determined by the two companies, members of the existing orchestras and the Musicians' Union. The time-table is for the new arrangement to be introduced in the autumn of next year. The likelihood of job losses among the musicians is not being ruled out.
The report by the working group, chaired by Neil McIntosh, the former chief executive of Strathclyde Council, describes the current position as being "on the edge of a precipice" and warns: "In short, Scotland's key national arts companies will either no longer be in existence by the end of 1996 or will, in some cases, have been reduced to a part-time or truncated existence."
It blames the present position on a variety of circumstances including audience decline, the recession and lack of investment in new productions.
Scottish Opera's director, Richard Jarman, welcomed the report saying his company and Scottish Ballet would retain their identities. David Williams, general manager of Scottish Ballet, said he gave a "guarded welcome" to the proposals.