A NORTH-EAST town is still hoping for a Christmas present from the Government.

A decision is expected by the end of the year on which towns will get city status to mark the millennium, the Home Office said last night.

Middlesbrough, on Teesside, is among the applicants, but its hopes of emulating Sunderland, on Wearside, are slim.

The Queen, on the advice of ministers, is to confer the honour from a field of 39 towns in the UK.

The towns had to apply by September 1 last year and the only timescale given for the announcement was that it would be during this year.

Reports say the decision has been delayed by a Cabinet dispute over a Home Office proposal to choose two English towns and one in Scotland, but none in Wales or Northern Ireland.

The choice in England is reported to be between Brighton, Wolverhampton and Swindon. The Scottish town of Inverness is also thought to be in the running.

A Government source said: ''There are suggestions there are to be two English cities and one in Scotland, and it is believed that Welsh Secretary Paul Murphy is unhappy about that.''

The Home Office said none of the applicants - 27 in England, four in Scotland, six in Wales and two in Northern Ireland - had been ruled out. But it is widely reported that there is a shortlist.

A spokesman said: ''We are aiming for an announcement by the end of the year."