The four Welsh regions have announced that they will operate under a salary cap from the start of next season.

The salary cap of £3.5million will cover the players registered for European competition by the Ospreys, Cardiff Blues, Scarlets and Newport Gwent Dragons, but will not include development players or academy costs.

It is hoped that the cap will lead to a greater emphasis on developing the next generation of Wales-qualified players.

"This is a significant step forward for regional rugby in Wales and the future viability and balance of our four rugby businesses," said the chairman of Regional Rugby Wales Stuart Gallacher.

"Regions have come together with a shared sense of responsibility to get their own houses in order and find solutions.

"This is a powerful signal of our determination to achieve our aims amidst some tough economic challenges in Wales now and in the future."

A salary cap of £4m is already in place in the English Aviva Premiership.