MANCHESTER'S economic growth has proportionately outstripped London's since the IRA bombing, a government report says today.

The document, published by the Office of the Deputy Prime Minister, admits London has received an unfair share of cash and calls for a sea change in policy.

It says northern cities should be given more money and freedom over how to spend it.

The report claims the Treasury should invest more in "transport infrastructure" - such as light rail - which would appear to be a boost for the attempt to complete the Metrolink extension.

It also says more consideration should be given to cities when formulating policy in all areas including education and health.

David Miliband, Minister for Local Government, said: "This landmark report shows our cities have made a successful recovery after years of decline.

"Cities have become the engines of growth once again. You only to have to look at Manchester to see the scale of change." Opportunity

The report was welcomed by Deputy Prime Minister John Prescott, who said: "We must grasp this opportunity to take our cities and regions to the next level and compete with the very best in Europe."

The report, called State of the English Cities, was compiled for Mr Prescott's office by an independent research team led by Liverpool academic Professor Michael Parkinson.

It said Manchester was a "notable exception" to a pattern of southern cities growing faster than their northern counterparts.

Manchester's increase in "gross value added" per head - a key growth indicator - was higher between 1995-2002 than London, Leeds or any major British city.

It means the amount each person in Manchester contributes to the national economy has grown at a higher rate than almost all other places.

The report said British cities had the best chance in more than 100 years to close the gap with their leading European counterparts. To achieve that, it said, Britain needed to follow the continental method of shifting more power and resources from the capital to the regions, letting cities shape their own futures.