Government experts could take over the running of Hull City Council after it was severely criticised by financial watchdogs.

A report released by the Audit Commission on Monday has recommended that Whitehall intervenes because the council is too "weak".

Now Deputy Prime Minister John Prescott, who is an MP for Hull, will have to decide whether to take action over his home town's local authority.

During the course of an internal inspection, the commission found the former Labour-run council is in serious financial trouble.

John Prescott: Faces decision over council

Other problems highlighted included failure to control the city's housing stock and poor leadership.

Criticisms were also made of the way cash raised from the multi-million pound flotation of the city's telephone company, Kingston Communications, in 1999 had been spent.

'Strategic vision'

The new Liberal Democrat leadership, which took power in May, says it is now turning around the council, which would have become bankrupt.

But the commission has recommended the Office of the Deputy Prime Minister (ODPM) step in and begin a programme of long-term change because the council cannot meet the challenge itself.

This could result in the ODPM sending in an external management team to run the council.

It is the third time such action has been called for, following similar reports into Hackney Council, in east London, and Walsall, in the West Midlands.

Control of housing was criticised

Sir Andrew Foster, controller of the Audit Commission, said: "Referring a council for intervention is not a decision we take lightly.

"But Hull's problems clearly warrant external action.

"Local people in Hull deserve a council that both understands and meets their needs, and has a strategic vision for the future of their community.

"We hope officers and members of the council will respond positively to these recommendations and start planning to bring Hull up to the level of the best councils."

'Treacle' left

However, Labour councillors claim many of the weaknesses highlighted in the report had already been recognised and acted upon when they were in power.

Councillor Daren Hale, deputy Labour leader, said: "The report makes a number of far-reaching criticisms that weren't new to us, We were making provision to tackle them.

"The report does accept the Labour administration was turning things around."

Councillor Janet Toker, Liberal Democrat deputy leader of the council, said: "We are now trying to plough our way through the treacle that's been left, we're heading in the right direction."