FEARS that more than 1,000 jobs could be lost in the North-East were heightened last night when a deal was set up to sell part of the Hibernia Foods group.

An unidentified UK food manufacturer has submitted a bid to Hibernia's receiver, KPMG, which includes the proposed purchase of the factory in Bridlington.

Although the company is known to be interested in other Hibernia assets, it is not clear if the firm's factories in Hartlepool and Stockton, which employ 1,100 people, are on its list.

The Northern Echo revealed yesterday how unions feared the break-up of the company could put workers on the dole queue before Christmas.

Details of the impending deal were released by US conglomerate Sara Lee, which has, in turn, reached a tentative agreement with the company to have its products made under licence should the receiver agree to the sale.

Sara Lee frozen desserts are already made at the Bridlington plant, while the factories on Teesside produce other branded and own-label frozen desserts and meals for supermarkets.

Until now, it had been assumed the group, which went into administration earlier this month, would be sold whole as a going concern.

But last night's development came after Missouri-based Sara Lee sent a senior executive to the UK to conduct negotiations as soon as details of the potential buyer emerged.

The company's president of worldwide frozen bakery operations, Mike Knowles, said: "We are encouraged by our ability to quickly reach this tentative agreement with a food manufacturer that meets our standards and would serve as a trusted supply partner."

However, there was better employment news for other parts of the region, with 500 jobs destined for Tyneside and a further 150 in County Durham.

The Inland Revenue yesterday announced plans for a second call centre at the Balliol Business Park, just outside Newcastle, which will handle tax credits.

Dawn Primarolo, the Inland Revenue's paymaster general, said yesterday: "These jobs are good-quality, permanent positions that will be a boost to the Newcastle area."

Meanwhile, inquiries have already started coming in about the jobs to be created at frozen food storage and distribution company Yearsley's new development on the Fox Cover Enterprise Park, in Seaham, east Durham.