CAMPAIGNERS were yesterday celebrating the survival of Scotland's only Aids hospice, although it will be in a changed form.

Milestone House in Edinburgh will now offer residential respite care and may also be the base for a new day centre for people with HIV and Aids.

Last May, it faced closure as part of a review by Lothian Health Board and Edinburgh City Council.

Ruth McCabe, manager of Milestone, said the outcome was not ideal, but it allowed Milestone to continue. It now had potential to expand to meet the respite needs of other Aids patients in Scotland who would be funded by their own health boards.

''Last year we thought it would close and we have worked really hard to encourage Lothian Health Board to see things from a different perspective,'' she said.

''Eight beds is not ideal and we still have to work on details of the funding. But what is really important to us and to service users is that we continue to have residential care here and we can still look after people who are dying and who have very complex needs.''

Milestone opened in 1991 with 20 beds as Britain's first purpose-built hospice for people with HIV and Aids. Edinburgh's HIV epidemic in the 1980s was largely caused by drug abusers sharing needles and this left a human legacy of a large number of relatively young people having to live with the conditions.

It received a great deal of celebrity support through charity fund raising. A site in the grounds of the city hospital was selected for the four bungalows which make up the centre.

Combination drug therapy then undermined the hospice's original function, since most patients could be treated in the community, but that still left a sizeable minority needing residential care.

The cost of combination therapy also drove hard into health budgets which were hard pressed by other priorities. The drugs bill for HIV and Aids patients in Lothian exceeds #2.5m a year.

Efforts were made over the last year to find alternative accommodation in central Edinburgh to take over Milestone's functions, but these proved unsuccessful. Continuation on the same site also means that services can be expanded if the nature of the epidemic and treatments change.

A health board spokesman said the new arrangements covered financial contributions for the next three years and would secure the future for Milestone ''for the foreseeable future.'' It was also a potential site for day care services for people with HIV and Aids.

Graham Bowie, chairman of the Waverley Care Trust, which runs Milestone, said: ''I am happy with this outcome. It balances the best view that can be taken medically of future needs with the resources which are available.''