Oldham Council was one of four in the county that was given the label by the Audit Commission (AC) at the end of 2002.

However, unlike the others - Trafford, Bury and Salford - Oldham was the only one to receive the lowest prediction score on its ability to improve.

Its plans to address the problems were due to be delivered to the office of the deputy prime minister, to meet a government-imposed deadline.

'Tentative steps'

In its report the AC criticised the council for not promoting good race relations and unsuccessful in creating stable communities and "fundamental change" was required.

However, the report, published last December, did acknowledge the council had taken "tentative steps" to improvement, including the reduction in racist incidents.

It has been warned that if it feels the plans are not good enough, the government could step in to lead the administration.

The other three authorities must also deliver recovery plans to the government.