The work carried out by an organisation aimed at creating jobs is to be transferred to the city council.

Prospect Leicestershire is to be closed after the city and county councils said they would cut their £350,000 annual funding.

Ted Cassidy, assistant to Leicester Mayor Sir Peter Soulsby, said Sir Peter believed it would be more effective to bring responsibility for job creation and economic development under his control.

He said it was too early to say whether the seven staff who work at Prospect will be employed by the council.

"We are bringing economic development in-house," he said.

"We need to look at specific areas in the city in terms of economic development and how we can do something for youth unemployment, for example."

Talking about the future of the seven staff, including chairman Nick Carter and chief executive David Hughes, Coun Cassidy said: "These discussions are at an early stage."

Prospect, entirely funded by the taxpayer, was set up in 2009 by the two councils. It had a budget of £1.5 million in 2009/10, but subsequently lost much of that in cuts.

A county council spokesman said it was too early to discuss any alternatives to Prospect.

Martin Traynor, chief executive of Leicestershire Chamber of Commerce, said he was pleased renewed focus was going to be given to economic issues in the city.