The north east of Scotland is set to receive a £504m funding boost over the next decade.

The UK and Scottish governments have each pledged £125m as part of the Aberdeen City Region Deal.

And the Scottish Government has separately promised another £254m for housing, roads and railways.

Scottish secretary David Mundell said the money will help support the struggling oil industry.

But the agreement falls short of the £2.9bn City Deal outlined by Aberdeen City Council last year.

Prime Minister David Cameron is expected to announce new UK Government measures to protect North Sea jobs in Aberdeen on Thursday.

Mr Mundell said: "Oil and gas is a crucial sector, not just for the north east of Scotland but for the whole of the UK.

"I know it's a very tough time for people who work in the industry and their families, and I am determined that the UK Government will do what it can to support them.

"This City Deal will help deliver that and demonstrates our commitment to this very important part of Britain's economy."

Oil crisis

There have been widespread job losses in the North Sea oil and gas sector since the value of Brent crude halved from a high of $110 a barrel in June 2014.

Oil and Gas UK estimates that the number of people employed by the industry in the UK has fallen by more than 65,000 since January 2014.

The City Deal also includes plans to build more affordable homes, improve road and rail transport and boost tourism in the north east.

Cities minister Keith Brown, who will sign the deal on behalf of the Scottish Government, added: "Aberdeen and the north east remain central to driving future growth and prosperity in Scotland.

"That is why the Scottish Government has agreed that on top of our existing support for the region we will invest £125m in a City Deal that delivers significant benefits for the region and Scotland as a whole.

"Delivery of the City Deal will reaffirm the north east's global reputation in oil and gas, and pave the way for diversifying the region's economy.

"Investment in digital and transport connectivity, the expansion of Aberdeen's harbour and the establishment of a new innovation hub will drive future growth and prosperity, and help to cement Aberdeen as one of the world's leading cities for investment and business."

How will the Scottish Government's money be spent?

· £200m to improve rail travel between Aberdeen and the Central Belt

· £24m to improve a junction between the A90 and A937 in Aberdeenshire

· £20m to help local authorities unlock land for housing

· £10m to improve digital infrastructure in Aberdeen and Aberdeenshire