THE chief executive of a North-East council announced he was quitting last night after revealing his high-pressure job was making him ill.

Colin Shearsmith is to retire at the end of the year as chief executive of Durham City Council, a post he has held for six years.

Last week, it was revealed that police are looking at allegations from the former directors of the Entertainment Team (Durham), which ran the city's Gala Theatre.

The allegations surround the council's handling of the contract the firm had to run the theatre.

Mr Shearsmith oversaw the £30m Millennium City development, which includes the £14m theatre venue.

Entertainment Team (Durham), went into liquidation with debts of about £700,000, weeks after the Queen officially opened it in May last year.

Mr Shearsmith, who is on sick leave, said yesterday: "I am heartened to know I have taken the council forward during the last six years and pleased to be leaving a sound base for my successor to build upon.

"It has been a privilege to be chief executive of this wonderful city. It is, however, a high-pressure job and there is no question that it is now affecting my health."

The council's Liberal Democrat leader, Sue Pitts, said Mr Shearsmith had transformed the council into a "modern corporate organisation".

She said: "His achievement has been the Millennium development with a wonderful theatre to add quality to all our lives.

"He had the courage to pick up and run with it when the management company failed."

Mr Shearsmith came under intense pressure when he found himself at the centre of a fraud investigation into allegations over a land deal for Millennium City.

After a seven-month inquiry, police announced in 2000 he would not face charges following advice from the Crown Prosecution Service.

The council is looking at plans to set up an executive board to run the loss-making theatre and has pledged to make public the theatre's losses.