Brighton and Hove is being edged out by Wolverhampton in its bid for city status.

The blow comes in documents leaked to the Argus. A Home Office circular says Wolverhampton's bid is the favourite, pushing Brighton and Hove into second place.

But there was good news after it emerged Downing Street has suggested creating up to four new cities for the millennium, instead of the expected one. The document describes Wolverhampton as being "well-established commercially and educationally, and is also a regional centre for leisure and entertainment."

It adds: "Being on the edge of the West Midlands, it acts as a focus for parts of Staffordshire and Shropshire."

The document says Brighton and Hove is "home to a number of major employers, an international conference centre and Sussex University, as well as being an important centre for tourism."

But is says the weak link in the bid is the doubt over how closely Brighton and Hove are connected.

It adds: "The population has increased to 250,000 since Hove became part of the borough in 1998, although Hove remains clearly separate from Brighton and does not feature significantly in the borough's bid."

The document concludes: "Taking size, history and distinct identity all into consideration, we assess Wolverhampton and Brighton and Hove's bids as the strongest, with Wolverhampton having the edge."

The three main criteria for city status are a population of around 200,000 or more, geographical distinctiveness or significance, and royal or historical connections.

The document from the Home Office's Constitutional and Community Policy Directorate says Brighton and Hove has "strong though not recent" royal connections.

The other three towns still among the favourites to win city status are Northampton, Chelmsford and Guildford.

Leaders of the Place To Be campaign for city status were disappointed today but remained optimistic Brighton and Hove could still scoop the title of

Millennium City.

A council spokesman said: "This document suggests we are one of the front runners. If we are one of the top two - and we know there will be at least two cities named, including the Golden Jubilee - we have to be hopeful of success.

"There is no question we are one city run by one local authority. Brighton and Hove has always been seen as one place."

Sue John, Brighton and Hove cabinet modernisation councillor, said: "I don't think anyone can rival us for being a tourism centre and for our cultural diversity. We already feel like a vibrant European city. Wolverhampton feels like a dark and dingy place."

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