The Tall Ships Race is returning to the North-East, injecting up to £50m into the region's economy.

Civic leaders celebrated yesterday as race organisers announced Newcastle and Gateshead as the choice to stage the only British leg of the event in 2005.

Newcastle hosted the contest in 1986 and 1993, when it brought in £38m.

Hosting the race is also seen as a big boost to the Newcastle-Gateshead bid for the European Capital of Culture title in 2008, which includes plans for an international festival on the Tyne, to start next year.

Tim Cantle-Jones, of regional development agency One NorthEast, said: "This is fantastic news for the European Capital of Culture bid. The Tall Ships is part of an amazing river festival that will be on not just for one year, but over five years."

Nigel Rowe, chairman of race organisers Sail Training International, said: "Tyneside deserved to win the bid to host our event in 2005, particularly at this exciting time for the area as it bids for European Capital of Culture 2008. Newcastle performed exceptionally well the last time it hosted the Tall Ships fleet."

Newcastle City Council led the bid in a joint effort with Gateshead Council, One NorthEast and the Newcastle Gateshead Initiative.

The four ports taking part in the four-week race in summer 2005 are Waterford, in Ireland, Cherbourg in France, Fredikstad in Norway and Newcastle-Gateshead.

It takes approximately four weeks for the ships to race, with a stay of three to four days in each port.

The leader of Gateshead Council, Councillor Mick Henry, said: "The spectacle of the Tall Ships Race against a backdrop of Gateshead Millennium Bridge and both quaysides transformed by 2005 will be phenomenal.

"Having seen the power of this event twice before, it doesn't take much to imagine its potential for the whole of the North-East."