Banks and building societies issuing LINK cards can now offer financial incentives to cash machine operators who install and operate free cash machines in certain areas.

The move follows an agreement in December 2006, between banks, building societies, ATM operators, Members of Parliament and consumer groups to widen the free cash machine network in target communities without free machines.

Looking across the whole of the UK, the 2006 ATM Working Group agreement identified 309 priority areas where communities of 3,000 plus people lacked convenient access to a free-of-charge ATM, as well as a number of smaller areas where a free machine was likely to be particularly valuable to a local community. Consumer groups and financial institutions agreed that a total of about 600 new free machines was needed.

384 new free machines have since been installed or are under contract to be installed. This means that 202 (65%) of these priority areas, as well as many of the smaller areas, are set to have a new free cash machine. Progress towards deploying the full 600 is continuing.

Treasury committee chairman John McFall MP, who chaired the ATM Working Group, said: "I am delighted with the progress being made on this initiative. The uptake for these free machines in just three months has been remarkable. The fact that firm sites have been found and agreed for nearly 400 of these machines already is a clear signal that they were much needed and welcome in the communities they are now or soon will be serving. What we need now is a final push to reach the target figure of 600, and the financial incentives to machine operators should help to achieve this goal."

The Villages Housing Association in Fitton Hill, Oldham, was one of the first sites to receive a free cash machine following the December agreement. Villages owns and manages around 915 properties on the Fitton Hill estate and a free HBOS machine was installed in the lobby early in the New Year.

Sue Ward, ard, office manager for the association said: "As we are always trying to improve the service provided to our tenants, we were more than happy to agree to the installation of the cash machine in our reception area. Since installation there have been plenty of very appreciative comments from tenants and staff alike who have used the free cash withdrawal and balance checking facility. We've also noted lots of new faces are visiting the housing office to use the facilities."

Edwin Latter, LINK Scheme Director said: "All of LINK's 50 Member banks, building societies and independent operators are contributing to this initiative. Since December's announcement, we have received tremendous support from a number of MPs, local authorities and community schemes in finding sites and this has helped LINK Members find locations for the new free machines. A free cash machine can make a significant difference to a local area because money withdrawn is usually spent in the area, helping sustain local business. With these 382 carefully placed machines, around 1 million people will now have convenient access to a free machine in places where there was none before. The work to fill the remaining gaps continues."

Nicola O'Reilly, Senior Policy Advocate at the National Consumer Council, said: "The NCC welcomes the industry initiative to introduce a financial inclusion premium, which is set to ensure sustained provision of free local ATMs to many of the UK's lower-income communities. Communities must now come forward with sites to ensure that all of the new cash machines pledged by cash machine operators can be installed and deliver free access to cash for the least well off consumers."

Francesca Hopwood-Road of Citizens Advice added: "We're very pleased with the work LINK has done on this. Citizens Advice bureaux identified many low-income areas with no access to free cash machines. People on low incomes are particularly hit by charges as they take out small amounts of money on a more frequent basis. Rural communities are also badly affected, forcing people to travel miles to the nearest free cash machine or pay a high charge. More sites do need to be found but we also need all the banks and building societies prioritising low-income areas for new free machines."

Potential ATM landlords, such as convenience stores, public authorities and community centres, are still being invited by LINK and its members to help pinpoint new locations in the remaining target communities. Details of the remaining areas can be found on the LINK website.