Less than two months after two high-profile local politicians blasted proposals to merge St Helens into a new Greater Liverpool area, the Government has devolved extra powers to St Helens Council - because the borough falls within the 'Liverpool city-region'.

A new Multi-Area Agreement signed by the Prime Minister and council leaders at Downing Street last week gave authorities across Merseyside more say in where money should be invested. The funding would then be handed over jointly to the five Merseyside councils, which form the newly created Liverpool city region.

It is hoped the new cross-council strategy will help safeguard jobs and support people coming off benefits to create 'a thriving international city region by 2020'.

Campaigners fear the move is the first step towards creating a Greater Liverpool but council leader Brian Spencer insisted the town would always retain its identity, describing the agreement as 'common sense'.

He said: "It's a positive move and can help give the whole of Merseyside a bit of impetus during the economic downturn. It's a big fillip for us and can help St Helens Council to further develop our excellent progress in terms of job creation and the economic agenda."

Ex-Liverpool council boss Mike Storey provoked angry last month by claiming that St Helens Council should merge into a Greater Liverpool region. But furious Sintellliners dismissed the proposal as a not too subtle bid to pilfer St Helens' cultural heirlooms.

Chris Dawson, chairman of the Friends of Real Lancashire pressure group, reckons this latest move could be the first step towards the creation of a new 'Greater Liverpool' region.

He said: "On the surface, it would seem this is just a means of co-ordinating services that are already shared by the constituent local authorities. Only time will tell, but there may be a more sinister agenda."