Bradford Council has evidence of fraud or misuse of public funds in connection with a multi-million-pound regeneration partnership, a senior councillor claimed today.

The Council is now working closely with West Yorkshire police over the allegations involving the Manning-ham and Girlington Single Regeneration Budget.

Deputy Council leader Councillor Simon Cooke said: "We have received a number of allegations.

"In more than one case we have what we believe is substantive evidence of misuse of public funds or fraudulently obtaining them."

The Council contacted police last year after receiving information from a member of the public about the allocation of grants, use of the money and what it achieved. The fraud squad began a preliminary inquiry to decide whether to proceed to a full investigation.

Today a West Yorkshire police spokesman said officers were now probing "criminal matters" and audit issues. She said the inquiry was being moved forward and its progress monitored at the "highest level".

Coun Cooke said: "We thought the information we had received was significant or we would not have taken this step."

Most of the SRB grants are for job creation, education, safeguarding jobs, training, business support services and providing community facilities.

The bids are evaluated and schemes are appraised to see if they are achieving their targets every three months.

The £9.7 million award was made in 1998 and was seen as a way of improving conditions and breathing new life into the area. But the scheme was slow to get off the ground and remained without a permanent chief executive for a long period after the first left for a new job. Current chief executive Jake Piergies arrived last year and a new board chairman, Coun Zulficar Ali, was also elected.

Since last year funding has been concentrated on running existing projects rather than allocations to major new schemes.

The partnership's latest annual report for 2001 to 2002 says achievements for the year included the creation of 183 jobs, qualifications obtained by 370 people through training, 240 jobs safe guarded and 3,777 pupils benefiting from projects to improve attainments.

The report says that in many cases performance exceeded the targets set.

Mr Pierges would not comment on the investigation. He said the Council was dealing with all inquiries about it.