UK Prime Minister David Cameron has announced £250m boost for the North Sea oil industry, which has been facing a prolonged slump in oil prices.

The new UK City Deal will see the UK Government, Scottish Government and local authorities work together to invest in future of North East Scotland.

Most of the investment will be made to boost innovation and diversification in the oil and gas industry.

The new deal will address various proposals from the region, which will include a new energy innovation centre, supporting the industry to exploit remaining North Sea reserves.

"Oil and gas is a crucial sector, not just for the North East of Scotland but for the whole of the UK."

The proposal will also include the expansion of Aberdeen harbour and enable the city to compete for decommissioning work.

After Scottish Secretary David Mundell signs the deal, David Cameron will visit Aberdeen and meet local employers and workers, as well as senior executives from the oil and gas industry, to hear about the challenges facing the area.

Secretary of State for Scotland David Mundell said: "Oil and gas is a crucial sector, not just for the North East of Scotland but for the whole of the UK.

"We need action to help in the short, medium and long-terms, building a bridge to the future of the North Sea; helping the UK’s oil and gas industry to export its world-class expertise around the globe; and encouraging diversification of the economy to create new opportunities in other sectors too."

Communities secretary Greg Clark said: "This package of support will help prepare the oil and gas industries for the future, given their crucial importance both to North East Scotland and the country as a whole."

Chancellor George Osborne announced a £1.3bn package of reforms in Budget 2015 for the UK Continental Shelf.

The package also included a £20m funding boost for seismic surveying to boost offshore exploration.

Approximately £45bn is forecast to be spent on decommissioning of its offshore infrastructure between 2016 and 2040.

Brent North Sea crude prices have dropped from $100 in 2014 to $33.10 due to weak demand and oversupply.