Preston City Centre Management Company (PCCMC) could be on the brink of collapse, a senior city business leader has warned.

It comes after the Chamber of Trade withdrew its funding of the company, and resigned from its board.

Now Julia Horn, manager of Preston and District Chamber of Trade, is questioning the company's future.

"I think it's going to have to fold," she said. "I don't see how it can keep going.

"We will not be putting any more money in, my budget's come to the end of its tether. Our small members definitely will not put money in."

She said the executive board had not met for 18 months, and the Business Improvement District (BID) plans launched in 2004, had "gone off the boil".

But acting manager of the company Craig Matthews, dismissed her claim, and said its future was assured, with new plans to be announced in a few months.

The news is the latest blow to the blighted not-for-profit company, set up in 2002 to promote the city centre.

In March, manager Graham Penticost resigned so that his £36,000 salary could help relieve the company's £40,000-plus deficit.

Its successes include extending the Christmas lights to Fishergate and bringing the ice rink to the Flag Market in 2002.

It was also responsible for setting up the Radio Net and Pub Net schemes, which Mr Matthews said have reduced crime in the city centre.

But last summer it was heavily criticised after the ten-day International City Festival, co-ordinated by PCCMC, suffered poor attendance, put down partly to lack of advertising.

Mr Matthews, who also manages Business Accord, a quango-like organisation set up to promote businesses in the AvenCentral area, admitted that the recent history of PCCMC had dented business confidence, but he said the Chamber of Commerce was working with the city council to secure the company's future.

"We have agreed and are committed 100 per cent towards continuing the company," he said. "What we are looking for is a realistic package, no pie in the sky ideas."

He said the activities of the company, like organising a Christmas campaign, would continue.

Chief executive of Preston City Council, Jim Carr, said: "The city council is committed to maintaining city centre management. This is even more important as the centre grows with the Tithebarn scheme."

He said a senior financial officer at the council was drafting a business plan to help the company move forward, and added: "I have met with the chief executive of the Chamber of Commerce to discuss how we can maintain city centre management activity while at the same time looking to develop the Business Improvement District in consultation with local businesses."

The PCCMC costs about £100,000 a year to run, of which the city council provides £22,500, and £28,000 comes from local businesses, the remainer is provided by AvenCentral Partnership and the European Regional Development Fund.

Last year the council and Preston Strategic Partnership bailed the company out with an additional £52,500.