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The Audit Commission is investigating Stoke City Council's deal to sell its £5m stake in the city's Premiership football club stadium.

Watchdogs have been asked to investigate councillors' concerns that the purchase deal, signed in 2007, had seen Stoke City FC avoid interest charges on the outstanding balance.

Under the agreement, Stoke City FC have bought the council's stake in the Britannia Stadium in instalments of £1.5m.

But, according to council sources, members who agreed the deal were not told about the phased payments and interest-free charges.

Neighbouring Port Vale FC were forced to pay interest on a similar deal they agreed the previous year.

Labour councillor, Mike Barnes, approached the Audit Commission to demand an investigation.

‘I contacted the commission because I knew that neither I nor other members were aware of the instalment plan… and I feel officers of the council misled members.'

Auditors will also look at claims Stoke Council's initial purchase of a 36% stake in the Britannia Stadium in 1997 breached European Union rules forbidding state aid to companies.

The council paid £3.1m for the stake to help finance Stoke City's £15m move to the Britannia stadium. Stoke Council intends to use £4.5m from the sale of its stake to fund a redevelopment programme in the city's town centre.

Local business has slumped since the football club's old stadium, the Victoria Ground, closed down.