The Arts Council said the money was lottery cash and was given 18 months ago as part of a recovery plan.

The body said because that plan had not been seen through it had a duty to recover the money.

A spokesman for the Arts Council said there were strict conditions governing lottery cash.

They said: "We have a particular duty as both the lottery distributor and also as a charity to show great care and diligence around how those resources are used."

The administrators have not yet commented on the move.

Earlier this month Arts Council England announced a �3m investment for theatre in Derby, but said it would not fund the financially ailing Derby Playhouse which has been in administration since November.