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A company created to help regenerate Gloucester looks set to be scaled down and run by the city council.

Fears were raised that the Gloucester Heritage Urban Regeneration Company (GHURC) would be scrapped as part of the government's Spending Review.

The city council said the group had brought in £500m worth of investment for schemes such as the docks project.

Under the new deal, the GHURC's yearly income is likely to drop from £750,000 to £400,000 and staff from 10 to four.

City council leader Paul James said: "We're looking to continue the regeneration company, albeit it in a slimmed down form.

"It does have pressures on its funding because the various partners who finance its running are either going to disappear or have less money.

"The Regional Development Agency is going, the 91Èȱ¬s and Communities Agency will not be funding it and the city and county councils have pressure on their own finances.

"But what we're looking to do - because we do think regeneration is so important to the city - is to carry on funding it in a modest way in the next couple of years. But it is dependent on the transfer of some of the RDA's asset to the city council."

The proposal will be discussed by the council's cabinet at the end of the month.

The GHURC was set up in 2006 with a 10-year plan to develop brownfield sites, repair and reuse historic buildings, build 3,000 new homes, create 2,000 new jobs and attract £1bn of private sector investment.

It is focusing on seven development areas called Blackfriars, Gloucester Docks, the Canal Corridor, Gloucester Quays, the Kings Quarter, Greyfriars and the Railway Triangle.