The row over a controversial British art exhibition in New York has ended with the city's mayor agreeing to drop his attempts to withhold funding from the museum which staged it.

Museum directors in the United States had argued that Mr Giuliani's action against the Brooklyn museum would set a worrying precedent.

This is an embarrassing climbdown for Mayor Rudolph Giuliani at a time when he is already facing political difficulties.

When the museum refused to withdraw the work last September, the mayor said he was withholding its funding and launching efforts to evict it from its building. That provoked accusations that he was denying Brooklyn Museum its constitutional right of free speech and damaging New York's reputation as a cultural centre.

Museum officials have welcomed the settlement as a victory for free speech and artistic expression.

But it couldn't have come at a worse time for him - he's been under heavy criticism for his handling of the police shooting of an unarmed black man. And for the first time in months his rival in the New York Senate race, Hillary Clinton, has pulled ahead of him in the polls.