Organisers had expressed fears that the festival could suffer major cutbacks after the Scottish Arts Council – which provided a significant portion of funding for the event - announced it would be dropping the Performing Arts category from its funding priorities for the 2008-09 financial year.
Previous support from the SAC has enabled the organisers both to keep ticket prices low and offer concessions, ensuring the festival has remained accessible to everyone.
Aberdeenshire council this week agreed to award £4,700 to the festival committee, announcing it as a one-off payment for 2008 only, as in future years the committee will have more time to apply to appropriate funding bodies for assistance.
The grant will come from the Kincardine and Mearns Area Committee's top-up budget after the move was agreed by members at Tuesday's meeting.
Area Manager Willie Munro gave his backing to the appeal, and said he would be happy to support the festival.
Folk festival organiser Trudi Clayton said she was delighted with the contribution.
She said: "It's excellent news and we really appreciate the support of the council. It really puts our mind at rest, as we were dubious about the future of the festival and what would happen."
She added: "It's taken a tremendous weight off of us. The folk festival is a big boost to the local economy every year, and I think people in the town as well as visitors would miss if it wasn't there. I think that the town will appreciate the council's contribution as much as we do. It's amazing."
Among the star attractions at this year's event are Eddie Reader and Barbara Dickson.
Each year the folk festival brings hundreds of visitors, both from the UK and many overseas countries, to Stonehaven, filling the B&Bs and bringing up to a hundred caravans, campervans and tents to the festival site in Mineralwell Park.