Labour'S bid to retain power in Southampton is balanced on a knife edge, the Daily Echo can reveal.

Sources within the council say that despite losing seats at this month's election and becoming only the second largest party, the Labour group still aims to come out on top following tomorrow's crunch annual council meeting.

Labour group leaders hope they have done enough behind the scenes to win the support of the two independent councillors who hold the balance of power at the £232m budget authority.

However, the final decision will be made in a dramatic public power struggle during the voting for the posts of the sheriff, mayor and council leader at the Civic Centre tomorrow.

The Daily Echo has learnt that at a private meeting on Friday night, Labour's 16 councillors opted to throw their weight behind former Liberal Democrat rebel Harry Mitchell's bid to become Sheriff of Southampton, effectively the deputy mayor. City council insiders say in return, Cllr Mitchell and independent colleague Paul Russell will back Labour when the council leader is elected later on at the same meeting.

This could see leader June Bridle remain in control of the city's £232m budget, despite the Liberal Democrats being the largest individual party.

With the 12-strong Conservative group set to abstain, it would leave Labour and the independents tying with the largest individual party, the Lib Dems, on 18 votes each.

The casting vote on who runs the city for the next 12 months would then be in the hands of the new mayor, who will also be elected at the same meeting. It will almost certainly be Labour's Parvin Damani, the current sheriff.

It is usual for the sheriff to become the following year's mayor but in 2002 Labour and Conservative councillors joined forces to block Liberal Democrat Norah Goss and installed Tory Brian Parnell instead.

The break with protocol is thought to date back to her defection from Labour to the Lib Dems.

The Lib Dem's candidate for the position of sheriff will be Ann Milton. If she was successful and the council remained hung again next year, she could have the casting vote, putting the Liberal Democrats in charge for the first time in 90 years.

This year, the 12 Conservative councillors seem to hold sway.

Deputy Tory group leader Royston Smith remains cautious, saying: "If it is the Liberals Democrat's turn, and I think there is some doubt about that, we will support their nomination."

Publicly Cllr Mitchell would not admit to backing Labour. He said: "The business of sheriff has got nothing to do with the political side of things at all. Of course I would like the job and the Labour group has decided they would like me to be sheriff."

Current council leader June Bridle said Labour had decided not to back Cllr Milton, who has had to have part of her leg removed after an infection, because members felt she may not be up to the job until she has fully recovered.

Cllr Milton dismissed concerns about her health, claiming she had got the go-ahead from doctors.