LIVERPOOL has officially lodged its second bid to become a “turnaround’’ cruise port and muscle in on Southampton’s lucrative business.

Despite the fact Liverpool grabbed a £20m public handout to build a cruise passenger terminal on the strict condition it would not be used by ships to embark and disembark passengers between voyages, the northern port is ignoring the prohibition as it pushes ahead with the controversial plan.

After months of behind-the-scenes manoeuvrings Liverpool City Council has submitted its application to the Department for Transport in the face of serious objections from Southampton and south-east MEPs.

Southampton is demanding UK shipping minister Mike Penning insist commercial competition between the two ports be carried out on a “level playing field’’ and that no permission should be given to Liverpool before it pays back the full amount of the original funding, which includes a £9m EU grant.

Unlike the northern city, Southampton has built up a multi-million-pound industry solely on the back of private investment from Associated British Ports, owner and operator of the city’s docks, and the shipping lines.

Two years ago the Labour government rejected a bid by Liverpool to upgrade the terminal status as unfair competition.

Although Whitehall will not comment on the outcome of Liverpool’s submission, the current minister has confirmed he will reconsider the ban on turnarounds if the Merseyside local authority repays “an appropriate proportion” of the initial grant.

In a reply to a written question from Caroline Nokes, Conservative MP for Romsey and Southampton North, Mr Penning said: “I have indicated that the condition might be lifted if an appropriate proportion of grant was to be repaid, recognising the effect on competing terminals that have not received subsidy.”

A spokesman for Liverpool City Council said: “We have offered to repay a proportion of the grant, subject to negotiation. How much this would be will become clearer once we have received a response from the Government.”

Recently one major company, Fred Olsen Cruise Lines, said it was ending voyages out of Liverpool due to the fact the northern port still had “not got its act together”.

Backed by EU cash given to economically depressed areas, Liverpool Cruise Terminal opened in 2007 but, unlike Southampton’s high-tech dockside terminals, there is no baggage handling, immigration, or re-storing facilities.

This means any potential cruise companies would, at present, be forced to use a berth in Bootle, described by one shipping line executive as “an industrial area that does not offer an appealing vista’’.