MIDDLESBROUGH is a town that has re-found its heart, Mayor Ray Mallon said yesterday in his annual address.

He was speaking to an audience that included his invited guest David Cameron, the Tory leadership front-runner, who had come to see Mr Mallon's pioneering street warden scheme.

Mr Mallon, in his fourth address since his election in May 2002, said Middlesbrough had to convert from its industrial past into a service-led future, and that meant becoming the entertainment capital of the Tees Valley.

He said 650,000 people lived within 20 minutes of Middlesbrough and 6.5 million people lived within 80 minutes. "When these seven million-plus visit our engine room - our town centre - and spend money, they make our businesses flourish and employ more people," he said.

That was why he was determined that Middlesbrough should become the site of the North-East's regional casino, which would be built with hotels and winebars on a disused dock.

"People will fly in to Durham Tees Valley Airport and spend on average on the tables £300 to £400," he said. "They want to lose it and they will - that will be their pleasure."

He continued: "We have a town that's beginning to believe in itself, a town that wants to go all the way, a town that's competing with every town and city across the country by being different.

"Middlesbrough now has its heart back - now its body will flourish, there's no doubt."

Mr Mallon stressed the importance of crime-free streets to Middlesbrough's future.

"I challenge this Labour Government to get a grip of anti-social behaviour," he said.

"If they don't, they will perish at the next election."

He said the revamped square and art gallery in the town centre - due to reopen in July - would not have money set aside to combat vandalism.

"There will be no budget for criminal damage because there will be none," he said. "We will not be defeated. The line has been drawn. The criminals will not cross it."

Earlier, he and Mr Cameron had visited the street wardens headquarters.

Mr Cameron told the wardens: ''You do not accept what far too many people in this country accept, and that is that rising crime is inevitable. You show it is not inevitable, we can tackle it.

''This project is about confronting crime and identifying criminals, and standing up to them.

''We will never deal with crime, and particularly anti-social behaviour, unless we recognise it is not just a matter for the police, the wardens or the Government, it is for everyone.

"We have a shared responsibility to get it right.''

* The Mayor's Achievement Award was presented to Rachel Grandey, the headgirl of Acklam Grange School whose 17 A-grade GCSE passes - 15 of which were A* - were among the best in the country.