An official inquiry has been launched into the finances and management of a £47 million Government-backed regeneration scheme.

Brighton and Hove City Council today took action in response to criticism levelled at the city's flagship New Deal eb4U project by a tribunal chairman.

The scheme was launched in 2000 to breathe new life into the city's most deprived estates.

Managers of one project within the scheme were challenged after a barmaid was taken on following a meeting at a city pub.

The general level of experience among a team which handles huge sums of public money was questioned.

There have been calls for the managers of the project to be suspended in the face of the mounting concern.

As the council decides to take action, The Argus can today reveal how eb4U has spent millions of pounds in its first four years.

These include £250,000 on a Press office, £1.26 million on a team who help set up community groups and £75,000 on a neighbourhood management services project, which "involved detailed consultation with residents and service providers to produce a local service plan".

Dozens of grass-roots organisations have been given smaller grants to run after-school schemes, holiday clubs and day trips.

In his response to an unsuccessful claim of unfair dismissal by eb4U employee Robin Lucas, tribunal chairman Michael Davey urged the council to "look very seriously" at the project.

A council spokeswoman confirmed an investigation was being launched.

She said: "As an accountable body, we will be reviewing the issues raised and considering whether further action is required."

The tribunal's concerns were echoed by Tony Greenstein, who represented Ms Lucas at the tribunal on behalf of the Brighton and Hove Unemployed Workers' Centre.

Mr Greenstein has written to council leader Ken Bodfish urging a full inquiry into eb4U.

He wrote: "In the light of findings of the employment tribunal, we are also calling upon you to suspend the senior management of eb4u, in particular the director and deputy director, pending the outcome of such an inquiry and to immediately institute the necessary reforms to meet the immediate criticisms of the tribunal."

The six-day tribunal, heard over three months, was held in response to a complaint made by Ms Lucas, who was hired as co-ordinator of ICT, an internet and technology project overseen by the World Web Wise (WWW) wing of eb4U.

Ms Lucas, of Rugby Place, Brighton, took Chichester Diocesan Housing Association (CDHA) to an employment tribunal claiming unfair dismissal and demanding £15,000 in compensation.

The tribunal heard Ms Lucas, 38, was sacked from her £18-an-hour part-time job in July last year after she raised concerns with a senior manager that an office used by the project was in the "trendy" North Laine area and not in the east Brighton area it was set up to help.

The tribunal accepted Ms Lucas's complaint but said it was in part motivated by her deteriorating relationship with WWW project manager Jill Mercer.

The claim was rejected by the panel but Ms Lucas was awarded damages of £1,296, equivalent to a month's wages. Graham Maunders, project director of eb4u, said he also planned to contact Mr Bodfish to discuss the tribunal.

Mr Maunders said: "Eb4u has always been accountable to Brighton and Hove City Council, with whom we have worked in close partnership."