TWO councils are to unveil ambitious plans which they say will transform the landscape of industrial Teesside and create hundreds of jobs.

But the multi-million pound proposals being drawn up by Middlesbrough and Stockton councils have sparked a funding row, with neighbouring councils fearing they could lose out on vital regeneration money.

Critics are worried the split could threaten to undermine a Tees Valley-wide initiative that aims to bring much needed jobs and investment to the area.

The ambitious project - the first time two Tees Valley councils have joined forces in such a way - centres on undeveloped sites along both banks of the River Tees.

The aim is to develop the river in a cohesive way on both banks, learning lessons from the success of the scheme that transformed wasteland on Tyneside.

The Northern Echo understands the plans, which are due to be unveiled within the next three weeks, include a conference centre, hotel, high quality waterfront housing, commercial premises and an arena or theatre.

Town hall bosses in Middlesbrough believe the scheme will benefit the entire Tees Valley area.

However, Darlington, Hartlepool and Redcar and Cleveland councils have all expressed concern that the Middlesbrough-Stockton partnership could lead to an unfair division of regeneration money.

Last night, Hartlepool councillor Stan Kaiser said: "Hartlepool will most certainly be at a severe disadvantage. We will be out on a limb.

"This is a disastrous situation in terms of the development of Hartlepool and we must be extremely cautious - and even negative - before we enter into any partnerships which are simply going to benefit others."

Redcar and Cleveland Council's cabinet member for corporate resources, Coun Glyn Nightingale, said: "We welcome any joint working between Middlesbrough and Stockton for the improvement of the heart of the Tees Valley.

"But there is no future for riverside development and town centre development if the economic powerhouse of steel, chemicals and the ports fails.

"That's why it is not enough for two boroughs to work together - the whole of Tees Valley must work together."

Darlington Borough Council leader John Williams said: "It is essential this initiative benefits all the Tees Valley. When we positioned Darlington as the 'Gateway to the Tees Valley', we undertook a study to demonstrate that the initiative would benefit the whole sub-region. It is essential that Middlesbrough and Stockton do the same."

Middlesbrough Council officials say the project - which will transform the areas in between the already developed places such as Middlehaven, the Tees Barage, Middlesbrough Town Centre and Teesdale - will benefit the entire Tees Valley.

A spokesman said: "Middlesbrough and Stockton want to work together on projects where they have a mutual interest and can achieve benefits for both boroughs.

"They will also continue to work with all their public and private sector partners in the Tees Valley to achieve the regeneration of the region."

On Tyneside, a partnership between Newcastle and Gateshead has seen the development of quayside housing, business parks, the blinking eye Millennium Bridge, the Baltic art gallery and a Hilton hotel.

Hartlepool MP Peter Mandelson said: "Regenerating the banks of the Tees is a good thing for the region, as long as resources aren't unfairly taken away from towns like Hartlepool.

"We are seeing a lot of good work being done in improving our town and this must not be allowed to stall."