THE North-East's three key cities and towns have been placed at the foot of the table in a national survey measuring economic growth.

Middlesbrough, Sunderland and Newcastle are all in the bottom five of the list compiled by a leading government think tank.

And the region's leaders have been warned they must buck up their ideas if things are to improve.

The chart ranks England's largest 56 cities and towns in terms of jobs, population growth and skills base.

The data was compiled by the Centre for Cities, which is part of the influential Institute for Public Policy Research - a leading independent think tank and key Government advisor.

"The North-East economy is still lagging behind the rest of the country," said the report's author, Glen Athey.

"It is still a hangover from the industrial and manufacturing backlash.

"These cities still have problems.

"The regional development agency, central government and the councils have to be asked if they are doing enough and what they could do.

"They are already doing a lot - but they could do more."

North Yorkshire faired better in the report - with York named as the country's fifth best performing city, behind Cambridge, Southampton, Bristol and Reading.

The chart was compiled using statistics covering the decade leading up to 2005.

Alan Clarke, the Chief Executive of One NorthEast - the development group charged with leading the regeneration of the region, said the survey failed to reflect the improvement in areas outside of the urban centres.

"There is evidence to show we are closing the gap with the rest of the UK and our economy is now actually the fastest growing in the country," he said.

"We remain to be convinced that a straightforward index of cities can accurately reflect this complex picture.

"We have more people in employment than ever before, we're experiencing indigenous business growth and we are attracting big national and international companies into the region."

Mr Clarke pointed to urban regeneration projects and the creation of visitor attractions including Gateshead's Baltic modern art gallery, the Winter Gardens at Sunderland and Middlesbrough Institute of Modern Art as proof that quality of life in the region is improving.

The North-East has the highest rate of unemployment outside of London at 6.7 percent. In the last quarter a further 6,000 people were out of work. In total 84,000 are unemployed.

The new report - Two-track cities: the challenge of sustaining growth and building opportunity - is published today.

Newcastle is named as having the fifth slowest growing economy, Sunderland is fourth bottom of the list, and Middlesbrough lies in second last place behind Liverpool.

Middlesbrough Council's executive member for regeneration, David Budd, said: "There is tremendous energy in the Tees Valley and commitment from all sectors to make this an area where people will want to live and invest in.

"There's a huge task ahead of us but we are pulling in investment."

Chief executive of Newcastle City Council, Ian Stratford, said: "This report does not tell us much we did not know already.

"Big cities have both the best economic opportunities and the highest levels of exclusion - that's why London only comes in the middle - and no-one should be surprised that smaller places like Cambridge and Reading are near the top.

"Newcastle has been doing well, and on some measures has created more jobs in recent years than Cambridge and Reading combined."

Sunderland City Council's Chief Executive Ged Fitzgerald said: "While historical data reflects a moment in time it does not represent the considerable progress made in the city in recent years.

"As a city in the middle of an ongoing £1 billion transformation, Sunderland is continuing to win the confidence of international developers and businesses alike and in the last year alone has attracted 1,000 new residents."

A spokesman for the North East Chamber of Commerce said: "The North-East has enjoyed a buoyant few years, but this report serves as a note of caution that we mustn't rest on our laurels."

York has managed to overcome the loss of one of the city's biggest employers - Terry's the chocolate maker - by increasing employment year on year. The city now has one of the lowest unemployment rates in the country.

"Our economy has changed repeatedly over the last ten years," said Steve Galloway, the leader of York City Council.

"We were heavily reliant on the railways and the confectionery industry but we have a top class university here and the spin off from that was Science City - a project aimed at starting up new companies in the technology sector.

"That has proved to be our biggest growth area in the last ten years and we have been able to create about 1,000 new jobs each year."

The report is available to view online at www.ippr.org/centreforcities.