York City Football Club's prospects looked ever more bleak this afternoon after council chiefs announced that the consortium of local businesses looking to take over the club had withdrawn its bid.

The shock announcement was made by York's three main political leaders and City of York council's chief executive at a hastily-convened press conference.

Council leader Dave Merrett said the group "felt unable to proceed" with its bid.

Liberal Democrat group leader Steve Galloway said: "There appeared to be no chance of York City continuing to play at Bootham Crescent.

The club could be wound up after Saturday's game against Swansea if an alternative buyer is not found.

One alternative buyer is said to be "waiting in the wings", and chief executive David Atkinson said there had been an initial telephone conversation with them, but no further contact had been made.

It was revealed at the meeting that the possible buyer was not Paul Caddick, the owner of Headingley Stadium, who has held talks with the council over a possible ground at Naburn.

Coun Merrett said: "The consortium has not found it possible to close the gap in terms of finding the necessary money to get the club through its short-term difficulties.

"Obviously we are extremely disappointed. A lot of people have worked very hard to make something of this."

Asked how optimistic the council was about the club being saved, Tory group leader John Galvin said: "We must always be optimistic until the final day arrives.

"Obviously we are disappointed with this, but until the last day dawns there is still a chance the club could be saved and we will continue to work towards that."

Liberal Democrat leader Steve Galloway said: "The council has tried very hard to find a solution in which local people and local interests were predominant. The council has also looked at different and innovative ways of using its assets such as property adjacent to Bootham Crescent to enable the Club to stay there.

"It is very disappointed that, despite all that has been done, this situation has been reached.

"We do not know enough about the remaining bidder or bidders to know if the council still has a role to play.

"Clearly the deadline is rapidly approaching, but unless the individual comes forward very quickly it does not appear there will be the kind of deal we would hope to have in place.

"Work will continue, but it is not looking good," Coun Merrett added.

Updated: 14:22 Tuesday, January 14, 2003