They're going to spend a lot of time examining their own navel Bolsover MP Dennis Skinner

But Liverpool councillors have denied any wrong-doing and said they should be held up as an example to other Labour districts around the country.

The decision was taken after a seven-hour meeting of the Labour executive and has divided the party's MPs.

Labour leader Neil Kinnock said there had been serious complaints made about the council and told the BBC the job of the inquiry was to follow up these complaints.

Sheffield councillor and executive member David Blunkett said it was a rational and reasonable way to progress which was in the interest of Labour and the people of Liverpool.

But Bolsover MP Dennis Skinner argued that investigating the council diverted attention away from the Tories and the "class enemy".

"They're going to spend a lot of time examining their own navel," he said.

Threats and intimidation

Council deputy-leader Derek Hatton - who has been accused of being a Militant loyalist first and Labour member second - said Liverpool district Labour was a "fighting, campaigning party".

And he denied allegations that workers and party members who disagreed with controlling groups on the council had been subject to threats and intimidation.

But Mr Kinnock - who is believed to have led calls for an investigation - said Militant's future was "very bleak and very short term".

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