The Audit Commission said it had been pleased with the progress

North East Lincolnshire Council is back in the black a year after revealing it had to make savings of �5m.

Better financial management and a firm approach to spending has brought about the change, councillors have claimed.

In May, the Audit Commission praised the council for its improved leadership and healthier finances.

What we can be proud of is the fact we have been able to address these problems and put the council back on an even keel Councillor Daniel Khan

The council is now in a position to stop borrowing money to meet day-to-day running costs, saving �1.25m over 2005 and 2006, a spokesman said on Monday.

The Office of the Deputy Prime Minister is satisfied with the progress and has now stopped regular checks on the authority, he added.

Last August, the council announced it was cutting 20 jobs and closing most of its public toilets and four libraries as a result of the budget crisis.

On Monday, finance spokesman Councillor Daniel Khan admitted that members had been forced to take some tough decisions to improve the financial position.

"Of course, there remain challenges ahead. But the result of those tough decisions is that we now have more of the money we need to provide the building blocks for the future development of the council's services," he said.