The zoo owes �500,000

The zoo is currently heading for a loss of �500,000.

In 2001, nearly �1m of council tax money was spent on the zoo which is also said to owe the local authority �750,000 for catering services.

Faced with the ultimatum, the chairman of Dudley Zoo board and former leader of the council, Fred Hunt, refused to step down.

But Councillor David Sparks, who has responsibility for the zoo on Dudley Council, accused board members of viewing the institution through "rose-tinted spectacles"

"It desperately needs huge investment to continue and the zoo board have been unwilling or unable to suggest a way forward save for more public subsidy."

But Mr Hunt defended their position and insisted the zoo had a future.

"Some of this loss goes back ten years. It's not an annual loss, it is a debt, rather than a loss."

The board was also subjected to a spending "embargo" which prevented members from sanctioning any expenditure without the local authority's consent.

At the heart of the crisis facing the zoo is how future funding will be managed.

The zoo was opened in 1937

The board had continued to depend on public money, but the council wants private investment.

The attraction's long-running financial plight led two developers - St Modwen and Bellway Urban Partnerships - to put forward plans which would have netted the zoo several million pounds in much-needed investment.

But the plans would also have led to a radical reorganisation of the zoo including a loss of land for development.

Under the plans, the famous castle remains, traditionally a visitor attraction, would have been hived off and run separately.

The plans also included extensive redesigning of the zoo using leading zoological experts as advisors.

Despite sacking the board, Cllr Sparks said he believed the zoo did have a future.

"I myself have visited a lot of zoos that have re-invented themselves recently.

"There is undeniably a future for the zoo but the unfortunate thing is, that unless action is taken it will go down."

An interim board will now be appointed to oversee the running of the zoo and deal with the current financial crisis.