We present the soft X–ray spectrum of the LINER galaxy M81 from a long observation with the XMM-Newton RGS . As well as continuum emission from the active nucleus , the spectrum shows emission lines from multi temperature collisionally ionized gas . The emission lines are significantly broader than the RGS point-source spectral resolution , and in the cross dispersion direction the emission lines are detected adjacent to , as well as coincident with , the active nucleus . This implies that they originate in a region of more than an arcminute ( \sim 1 kpc ) spatial extent . A good fit to the whole RGS spectrum can be found using a model consisting of an absorbed power law from the active nucleus and a 3 temperature thermal plasma . Two of the thermal plasma components have temperatures of 0.18 \pm 0.04 keV and 0.64 \pm 0.04 keV , characteristic of the hot interstellar medium produced by supernovae ; the combined luminosity of these two plasma components accounts for all the unresolved bulge X–ray emission seen in the Chandra observation by [ ] mpage-C2 : tennant01 . The third component has a higher temperature ( 1.7 ^ { +2.1 } _ { -0.5 } keV ) and we propose X–ray binaries in the bulge of M81 as the most likely source of this emission .