The Nuffield Orthopaedic Centre (NOC) has received a major boost in its battle for survival as an independent trust.

The specialist hospital in Headington, Oxford, has succeeded in its bid to become a Biomedical Research Unit.

The award will bring in an additional £1m a year to boost research into developing treatments for musculoskeletal disease, including osteoarthritis.

The Government announcement comes as it emerged that a question mark is hanging over the future of the NOC trust, which may see its services taken over by private companies or another NHS Trust.

Only two other hospitals in the UK were selected to be Biomedical Research Units in Musculoskeletal Disease.

But while the money will boost work on groundbreaking treatments, it is ring fenced for research and will not ease the mounting financial pressures on the hospital.

The NOC recently learnt that it could not bid for foundation trust status because it was not deemed to have the "financial stability" to go forward.

Instead, the Strategic Health Authority warned the troubled hospital may have to be merged with a bigger trust or even a private health provider.

The NOC's new status will fund work into cutting edge research, such as using spider silk to repair and regenerate tissues.

Prof Andy Carr, who will become director of the new unit, said research would focus on improving surgical skills, joint replacements and ground breaking work on regrowing cartilage and tendon, which could ultimately benefit thousands of patients around the world.

Disease prevention will be another key area. Researchers, for example, will be investigating giving pregnant women vitamin D supplements to increase bone strength of babies.

But Prof Carr feared the new unit's work could be severely damaged if the NOC were to lose specialist services.

Prof Carr said: "The success of this is under threat as a result of the uncertainty that hangs over the NOC.

"My ability to deliver on this huge opportunity would be compromised if there were substantial changes in its structure, or if elements of services were moved.

"It seems extraordinary that we can be recognised as one of the best three musculoskeletal centres, yet judged financially unviable."