Last year the council was found to be 'failing' by inspectors

A new report is due to be published on Friday and is expected to be equally critical.

It is also believed that acting chief executive Jan Didrichsen has been called to crisis talks with Whitehall officials about the council's future.

His predecessor, Jim Brooks, retired from the post on Wednesday following a suspension due to allegations that he was involved in the leaking of the original audit report.

Government trouble-shooter

In June last year, inspectors branded the council as "failing" and concluded the authority was in severe financial trouble, had a culture of bullying, poor leadership and a problem with empty council houses.

The latest document is expected to criticise the council on four issues: housing, corporate governance, financial planning and political culture.

The government has the power to appoint a trouble-shooter to work alongside the existing administration or even take full control of the council itself.

A spokeswoman for Hull City Council was unable to comment when approached by BBC News Online.

A spokesman for the Audit Commission declined to comment on the report details but added: "All will be revealed on Friday."