Government ministers have vowed to take up the case of a Hamsphire children's hospice which has lost millions in the Iceland bank collapse.

Trustees of Naomi House held talks in London yesterday with Kevin Brennan, Minister for the Third Sector, who is the Government's charity supremo.

Khalid Aziz, who chairs the hospice in Sutton Scotney, said the meeting went well, and the minister agreed to take the issue further.

Said Prof Aziz: "We had a good meeting with the minister, and I think we were able to outline a compelling case for the hospice and the work that it does.

"The minister said he would be speaking to the health minister about it, and more importantly, the Treasury, and my hope is that we might hear something from him in a couple of weeks' time.

"I think we made it very clear how important Naomi House is to the community."

The hospice went armed with a petition signed by 7,600 people calling for Westminster to act.

The charity had £5.7m, nearly 40 per cent of its funds, frozen when the Kaupthing Singer and Friedlander Bank collapsed in Iceland in October.

Westminster has already guaranteed the savings of private investors, but has not extended that to charities, councils and businesses.

Because of its cash flow problems, Naomi House suspended its outreach service just before Christmas.

Then, earlier this month, it revealed that the opening of Jack's Place could be delayed due to a shortage of money to pay new staff.

The £12m extension, which is due to open by Christmas 2009, is being designed for teenagers with life-limiting illnesses.