Grants for individual projects could be made to the charity, whilst the theatre is looking at whether government funding can be secured directly
The Scottish Youth Theatre could be saved from closure as arts bosses examine securing alternative funding.
The theatre – which has helped actors such as Karen Gillan and Gerard Butler launch their careers – announced its imminent closure last week after having its budget slashed by Creative Scotland.
However Creative Scotland has now said the £200,000 shortfall could be made up with grants for specific projects.
It is understood that the youth theatre has also been working on a plan to win direct government funding.
The decision to close this summer was made after Creative Scotland funding cuts meant the theatre faced losing a third of its required income for 2018-2021.
Creative Scotland chief executive Janet Archer said it is possible that the charity could make up the shortfall through individual grants.
"Not many, but some organisations have managed to work project funding in a way that helps them to be more flexible to respond to opportunities as they arise," she said.
Archer continued: "My staff will always say it's (our budget) under huge pressure, so we're only able to fund one in three of the applications that come in.
"But there is a possibility that Scottish Youth Theatre could come into open project funding and be successful."
Scottish Youth Theatre chief executive Jacky Hardacre said that she was working on a plan to win national theatre company status for the charity, which would allow it to apply directly for funding from the government.