CAMPAIGNERS fighting the proposed regional assembly for the North-East have failed in a legal challenge against the Government over a controversial information leaflet.

The High Court has rejected an application by North East No, the group set up by Sunderland campaigner Neil Herron, calling for a judicial review over the content of the Your Say leaflet, issued by the Office of the Deputy Prime Minister.

Campaign directors yesterday decided not to pursue the matter after being warned they faced a potential legal bill of up to £50,000.

The Government earlier admitted the leaflet contained an error concerning the relative costs of local government reorganisation in County Durham and proposed sending a correction to the 220,000 households in the county.

North East No argued that the correction should be sent to all 1.9 million voters in the region - at a cost of up to £1m - and also argued that the original leaflet contained other misleading information with regard to the voting system to be used in the referendum.

On Friday, the campaign group filed papers at the High Court, in London, calling for an urgent judicial review of the case, but yesterday, after the application was refused, directors of North-East No decided not to pursue the case further.

"We were confident of our case," said Mr Herron, "but we have been priced out of action."

A spokesman for the Office of the Deputy Prime Minister said: "We are satisfied with the outcome - we have said all along that we believed we had acted properly throughout."

Copies of the clarification letter are expected to be delivered to every home in County Durham by the end of the week.

The news came on the day the first referendum ballot papers rolled off the presses.

Printers have until October 18 to deliver the 1.9 million ballot forms to Royal Mail for distribution to voters over the following few days.

The majority of the voting packs are being printed in Jarrow, but yesterday the first of the 210,000 destined for voters in Sunderland were completed the city council's in-house printing operation, City Print.