A DRAMATIC policy U-turn has been announced by Scotland's embattled arts body after a turbulent year which culminated in the resignation of its under-fire chief executive this week.

In a contrite statement, the board of Creative Scotland has set out major reforms, including the reversal of funding cuts, abandonment of controversial projects, and a promise to end "promoting itself ahead of artists".

At the end of a watershed week, the arts quango apologetically acknowledged the need for substantial change.

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It said "many important relationships" between artists and the body had deteriorated in the ongoing crisis about policies and funding decisions.

The crisis-hit organisation, which annually distributes £80 million in government and lottery funds, said it had listened to criticism and had accepted it had got it wrong in a number of areas of arts policy.

The extraordinary statement comes days after the resignation of Andrew Dixon, its chief executive.

In a major turnaround, the organisation has promised wide-ranging reforms.

These include the apparent reversal of the controversial policy of removing fixed-term funding for more than 40 of the country's leading arts companies.

Instead the body's board, led by Sir Sandy Crombie, the former chief executive of Standard Life, said it was now committed to "multi-year, long-term support available to as many organisations in Scotland as possible" after what it called a period of painful but essential re-examination.

It has also cancelled "strategic commissioning", the contentious plan of targeted cultural funding, freeing up around £3.5 million in funds.

And the body promised to tone down its taste for self-publicity, with a commitment to "reducing efforts on activity that could be construed as promoting Creative Scotland ahead of artists, creative practitioners or cultural organisations" – a drive that will likely see the end of events such as next week's much-criticised black-tie Creative Scotland Awards at the Kelvingrove Art Gallery and Museum.

Creative Scotland also promised to let artists feed into policymaking. The statement from the board adds: "It is time that Creative Scotland stopped being the story."

The Herald understands more changes are likely in the coming weeks, including possible staffing changes, as well as the alterations to the body's often-criticised funding mechanisms.

The board's statement, driven by two internal reports by board members Ruth Wishart and Barclay Price, were largely welcomed last night.

David Greig, the leading playwright, said: "I think the acknowledgment, the new strategy and the desire to have artists feed into future policy is all good news.

"The challenge to the sector now is to come forward with goodwill and collaborate with CS staff to develop the new shape of arts funding – a chance to develop some really innovative thinking.

"It could be a very fruitful period ahead. A lot of trust to rebuild, but good steps here."

Katrina Brown, the leading contemporary art curator, added: "It's heartening to see so much of the comment and discourse of recent months reflected in the statement, if also a rather sad moment of realisation of just how badly wrong things have gone.

"But statements like 'artists and creative practitioners should be at the heart of our thinking', and the assertion of the value of expertise both internally and externally, are utterly welcome. The words are good but it will of course be the actions that count."

The statement adds: "Changes to make the language and tone of Creative Scotland more accessible are already underway, and we accept that the nature and number of our funding streams and programmes has led to confusion.

"This will also change. Work has begun on simplifying the routes through which individuals and organisations can access advice and funding.

"Stability is a core concern of many companies, not least in this difficult financial climate and we intend to offer that stability in a number of key ways."

It also said that it would use the word "support" instead of "investment", a term which proved unpopular among many in the artistic community.

Fiona Hyslop, the culture secretary, said: "Creative Scotland is clearly determined to take prompt and decisive action to address the issues of concern to the sector as quickly as possible.

"The plans for extensive, ongoing external consultation will herald a new more collaborative direction, while the internal reforms on structure and processes should enable the organisation to make better use of staff skills and expertise in its dealings with the sector.

"I would now urge artists to engage positively and constructively with the regular dialogue events that are to be set up so that trust can be re-built and the organisation can focus on supporting the rich diversity and excellence of our arts and culture."

The reports by Ms Wishart and Mr Price will be published next week, with more detailed plans for changed expected in early 2013, and the board will also begin the process of recruiting a new chief executive in the New Year.