Gordon Brown killed plans for a supercasino in Britain yesterday, provoking anger in Manchester and ending a six-year attempt to liberalise gambling that cost the taxpayer and industry millions of pounds.

The Prime Minister told MPs that he would consider whether there were “better ways” of improving poor areas, rejecting the case made by Tony Blair that casino expansion would bring jobs and money to deprived locations.

Government officials said that Mr Brown would still put before Parliament plans for 16 smaller casinos, which are likely to pass without objections. They are less politically contentious, in part because they will not contain the unlimited-stake, unlimited-prize slot machines, and Liberal Democrats and Conservatives have indicated they would vote for such plans.

However, the Conservatives accused Mr Brown of hypocrisy for voting in favour of the legislation under Mr Blair then discarding it when in power. And in the first sign of main-stream backbench discontent in the Labour Party, Graham Stringer, the Manchester Blackley MP, called the decision “weak”. Mr Brown’s spokesman said later that the decision had been taken in consultation with James Purnell, the new Culture Secretary, but there had not been a Cabinet discussion on the issue.

Gordon Brown's Black Wednesday

The Northern Rock disaster has torn away any remaining credibility the Prime Minister had

Background

• Sorry story tests Gordon to the limit

• Gordon, how wonderful, wise and talented am I?

• Brown’s brain and his hand are not always connected

• How 'cruel' schooling scarred Brown

Related Links

• Clunking great fist lands in royal area

The Government’s casino policy was thrown into turmoil in March when the order authorising a supercasino in Manchester, along with the 16 smaller casinos, was voted down by the House of Lords by three votes, having been passed by MPs by 24.

Mr Brown said: “This is an issue on which there is no consensus found in the two Houses of Parliament. And it is an issue now subject to reflection over the next few months.

“In September we will have a report that will look at gambling in our country — the incidence and prevalence of it and the social effects of it.

“I hope that during these summer months we can look at whether regeneration in the areas for the supercasinos may be a better way of meeting their economic and social needs than the creation of supercasinos.”

Millions of pounds of public money have gone into Mr Blair’s attempts to change gambling policy. The six short-listed councils to run the supercasino spent up to £200,000 each on their bids, and the Casino Advisory Panel, which made the selection, cost £400,000.

Mr Stringer, a former government whip, said that he was surprised and shocked by the decision. “For the Prime Minister to side with the Lords over the Commons is surprising,” he said. “I think it is a weak decision to go back on a decision arrived at by an independent panel and confirmed by the panel. I just don’t think it’s acceptable.”

However, Sir Richard Leese, leader of Manchester City Council, suggested that all was not lost and said that he would continue to press for the casino. “There is no need for panic,” he said. “We will continue to push for a destination casino in East Manchester, which we believe will deliver the maximum regeneration benefits.”

Sir Richard is unlikely to upset ministers too much, however. The news about the casino comes at a sensitive time for Manchester, which is bidding for a £3 billion transport improvement package dependent on the introduction of a congestion charge.

For Larbi Salhi, a reformed gambler who lost his family through his addiction, Mr Brown’s announcement was welcome. He believes that a supercasino on his doorstep would test his resolve to the limit.

Surveying the bleak car park in the shadow of the City of Manchester Stadium where Manchester’s answer to Caesar’s Palace was to be constructed, he said: “I don’t want it. It would create crime, hassle, but more than that, only cause problems between families with the men spending too much money. I know — it happened to me.”

Mr Salhi, 47, is not alone among residents in the inner-city suburbs of Clayton and Beswick — said to be the most vulnerable to the lure of Las Vegas-style gambling — to believe that the Prime Minister has done them a favour.

Across the busy arterial road from the car park, shoppers at the giant Asda-Walmart store said that they had been sceptical about regeneration through gambling. Mary Fortun, 59, said: “I didn’t really want it here. We’ re congested enough as it is. The road is chaotic here just to do your shopping in Asda.

“It would have attracted a lot of vulnerable people. Some people would probably have given it a go, but I wouldn’t have.”

Michael Granelli, 54, said: “I am not bothered because I didn’t think we needed it in the first place. It’s too much for around here which already has the City of Manchester Stadium and the Asda-Walmart.”

Times Recommends

• Savers left in limbo as Icesave freezes deposits
• Kennel Club changes breeding rules
• Passengers triple risk of fatal crashes