A financial crisis which left Bradford Cathedral with millions of pounds of debt has today been solved, senior churchmen revealed.

Creditors owed money after the failure of Bradford Cathedral's Life Force project have agreed a new financial arrangement to help solve the church's debt problem.

Proposals for a Company Voluntary Arrangement (CVA) have been agreed, which will see creditors receive a proportion of funds owing to them following the collapse of the Millennium multi-faith exhibition only six months after its opening in July 2000.

The news has been welcomed by the Bishop of Bradford, the Rt Rev David James, who said:

"This agreement allows the cathedral to continue its important role as a focus for Christian life and witness in the city and in the Diocese of Bradford."

The Life Force exhibition, in St Peter's House, Forster Square, was set up to establish a living history of faiths and beliefs in Bradford and was funded by grants and loans.

But after failing to attract enough visitors it was forced to close, leaving debts of £4.5 million, including £106,000 to York exhibition-designers Past Forward.

This led to questions in Parliament by York MP Hugh Bayley who accused the cathedral of using its charity status to avoid paying the debts.

Technically the cathedral was bankrupt but the Church of England's exempt status meant this could not be declared. Mr Bayley called for a change in the law to make the Church responsible for debts "incurred in its name".

Cathedral Dean the Very Rev Dr Christopher Hancock, appointed in 2002 to deal with the debt problem, said: "We are grateful and indebted to the creditors for agreeing to what was our only viable course of action to resolve the cathedral's financial difficulties. I sincerely wish another solution had been possible."