Work has begun on a £45,000 facelift at Wantage Hospital -- the first in five years.
Jenny Hannaby, who heads up the Save Wantage Hospital committee, said it was one of the most positive steps taken by the South West and South East Primary Care Trusts which had threatened to close the 24 beds in Garston Lane as part of a reorganisation of health care in south Oxfordshire.
Mrs Hannaby said: "This is a positive step for the future of the hospital and the best Christmas present this town could have this year. I understand too that the hospital's League of Friends has also offered money from its funds for further improvements."
Hospital administrator Ginny Brown said the building work had lifted patient and staff morale at the hospital, which will mark its 125th birthday in February and which has recruited two part-time nurses to start work after Christmas.
She added: "The hospital was looking rather tatty. We didn't know this was going to happen until about a couple of weeks ago, it's needed so much."
The work so far includes repairs to the roof, replacing windows, painting fire escapes, sealing guttering, replacing broken paving and laying Tarmac.
Colin Wilkins, secretary of the League of Friends, said: "We've offered money, but we still have not had specific requests."
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