COUNCILS have been denied millions of pounds in Government grants because of mistakes during the last census.

The errors have prompted politicians to demand recounts in a number of areas around the country - including Middlesbrough, where civic leaders say they have lost out on more than £2m.

Doubts about the accuracy of the 2001 census emerged yesterday when the Statistics Commission - the Government's independent watchdog - concluded that large numbers of the population might have been "missed" during the count in the London borough of Westminster.

The findings could pave the way for challenges from other local authorities which have questioned the results, and prompt a partial recount.

Middlesbrough Council insists the population of the town is 139,000 - 5,000 more than the official census figure upon which some Government grants are based.

The commission said the Office of National Statistics should carry out a recount in 2006 in what it described as the "very hard to count" areas such as town and city centres with transient populations.

The £2m Middlesbrough claims it has missed out on would almost be enough to wipe out an overspend in the council's social services department.

It could also have been used to reduce council tax for residents or plough into mainstream services such as education, highways or the environment.

The deputy mayor of Middlesbrough, Bob Brady, said last night: "The evidence we have collected from health, benefit and schools data all point to a serious error being made by the census office. That error cost Middlesbrough more than £2m in grant support last year.

"This latest study further supports our case and we will now be urging the census office and the Government to review the situation and give Middlesbrough the settlement it deserves."

Statistics Commission chairman, Professor David Rhind, said: "There is too much uncertainty about the final results in the 'most hard to count' areas.

"The Office of National Statistics did not have enough reliable information available to provide a confident estimate in this case."

Len Cook, the National Statistician, said the problems should be ironed out before the next census in 2011.

Middlesbrough South and East Cleveland MP Ashok Kumar backed the call for the town to be given its "missing millions".

He said he would be writing to the Treasury to have the revised number acknowledged.

Dr Kumar said last night: "If it is applied it should mean that the public services in Middlesbrough should get a better financial deal."