Durham County Council was accused last night of wasting up to £1m in public money after losing a bitter six-year legal battle.

But the dispute now looks likely to return to the courts -- meaning the cost to taxpayers will soar yet again.

The Northern Echo can reveal that a costly arbitration case between Darlington Borough Council and the county council has come to an end.

The wrangle began in 1997, shortly after Darlington split from the county council in a local government shake-up, with the borough claiming it was owed £2.2m from a £12m local development fund held by Durham.

The arbiter has now ruled that Darlington is entitled to the cash -- plus £1.1m in interest from the past six years.

The county council has handed over the £2.2m, but is appealing against the arbiter's decision regarding the interest.

Senior figures in Darlington council have condemned the county authority for "adding to the burden of its taxpayers" by launching the appeal.

Durham has already been hit with the costs of the "divorce" case, thought to be between £500,000 and £1m.

Darlington council leader, John Williams, said the ruling "totally vindicated" his authority's decision to fight for the money.

But he added: "It is quite beyond belief that the county accepts its debt to us of £2.2m, that should have been paid some six years ago, but refuses to pay the £1.1m interest. This money rightfully belongs to the Darlington community."

The arbiter in London said it was "both absurd and inequitable" that interest should not be paid.

However, county council leader Ken Manton said his authority had raised a point of law concerning the payment of interest.

He said: "I am surprised that Coun Williams has expressed some disbelief at what we are doing.

"This has become a straightforward legal matter in which he is representing the interests of the people served by his authority just as I am representing the interests of those served by Durham County Council."

The £12m cash pot was a mixture of Government grants and council tax.

Darlington has also been seeking some of the shares the county holds in Teesside Airport, an issue which is now thought to have been resolved.

The council is believed to have acquired two-thirds of Durham's shareholding, although legal discussions are still taking place.