The Liberal Democrats in Liverpool began work today to discover whether they can turn a notional majority of one into a workable administration.

The city was apparently heading for a hung town hall overnight until Warren Bradley, the council leader, made a surprise announcement that he had struck a deal with a Labour defector.

He boasted that with the support of Nadia Stewart, who sits as an independent for the Croxteth ward, he has the required 46 council seats to continue his administration and "retain political stability" in the city.

It was a dramatic ending to the late night count which is already ushering in the most turbulent period of confusion and uncertainty in the Dale Street municipal building since the party came to power in 1998.

There is also likely to be some horse-trading as the two main parties try to cultivate the support of the Green party, who doubled their representation n the council to two seats, and the old Liberal party.

Joe Anderson, the Labour leader, condemned Mr Bradley's stratagem as the Liberal Democrats "clutching at straws".

In recent months Mr Bradley's administration has been beset by problems, become mired in scandal, weighed down by financial deficits and condemned as the worst performing council in England by the Audit Commission.

It became clear that the council was heading for no overall control with Labour making gains in Anfield, Belle Vale, Kensington and Yew Tree. The Greens took St Michael's, their second seat in the ward, from the Liberal Democrats.

The Liberal Democrats lost five seats, held 11 and gained two out of a possible 31 seats across the city.

As the Labour activists began filtering away from the Wavertree Tennis centre, where the count was held, Mr Bradley let slip his revelation that he had met Ms Stewart earlier in the day for a "chat" and that she had agreed to come over to his side.

Ms Stewart , who resigned the Labour whip last June after accusing the Labour leadership of bullying and intimidation, has been sitting as an independent.

Mr Bradley said: "It has been a tough night for the Liberal Democrats after 10 years in power but I am please to say we have kept control with independent Nadia Stewart who has come over to the Lib Dems."

His Labour opponents, who had been predicting 'internecine warfare' within the ruling party, were furious.

Mr Anderson said: "She has got nothing to offer them other than to prop up a failing administration. The people have spoken and this is the Liberal Democrats clutching at straws."

The ruling group's problems began last summer when the Mathew Street music festival, the city's summer showcase, was cancelled at the last minute over health and safety fears. The row led to the hurried departure of Jason Harborow, the Culture Company chief executive with a substantial pay-off.

Meanwhile, the administration is facing a £20 million bill for its contribution to Capital of Culture commemorations which, critics, claimed, has been inadequately budgeted for. Labour say the money means redundancies and the closure of care homes, swimming pools and libraries.

In February Liverpool City Council was officially declared England's worst performing local authority by the Audit Commission scoring only one star out of a possible four for "spending money they have not got".

The defections of two Liberal Democrat councillors sapped the party's morale, blurring the battle lines and reducing their majority in the chamber to only six.

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