COUNCIL chiefs today hailed the move by the Co-operative Group to remain in Manchester city centre, safeguarding 3,000 jobs.

The group yesterday revealed that it would not be moving its headquarters out of the city, putting the major commercial landlords in Manchester, such as ASK, Allied London and Town Centre Securities, on red alert.

Sir Richard Leese, leader of Manchester city council, said he was `delighted' at the news, and revealed that the council had committed £20m to help transform the Co-op's existing Northern Gateway site.

He said: "We have had very productive joint discussions over the last few months … The group is currently working on a masterplan for its existing city centre site which will anchor a major new mixed-use quarter in the northern part of the city centre and provide significant opportunities to drive regeneration in this area."

Sir Richard added: "We will be recommending that the city council invest up to £20m in the area, to ensure that the public realm and other associated facilities are of the highest quality and can provide the basis for other commercial and social facilities to develop and flourish."

Councillor Pat Karney, the council's city centre spokesman, welcomed the move as `fantastic news'.

"It is a real vote of confidence in the city centre. We were all shocked when they made the announcement about moving, but they can now be part of the fastest growing city centre in the UK."

Although the Co-op did not reveal which locations it was looking at, sources place ASK's Exchange Greengate scheme the clear favourite because of its proximity to the existing HQ and its regeneration impact.

Another ASK development, First Street, Allied London's Spinningfields and Town Centre Securities' Piccadilly development are also thought to have been evaluated, but are less likely.

Peter Marks, chief executive of the Co-operative said: "We are delighted to be retaining our historic links with Manchester, which stretch back to our foundation in 1863."