The inquiry centres on alleged breaches of  rules governing contracts and financial regulations, the council said.

A spokesman for Staffordshire Police said that a 50-year-old man, not employed by the council, had been arrested in Newcastle-Upon-Tyne in connection with the inquiry.

The council would not comment on suspension of staff working in the Regeneration Directorate, but confirmed it was working with police and the Audit Commission, which seized a number of files at the council offices.

John van de Laarschot, chief executive of Stoke-on-Trent City Council, said: “The City Council is working closely with Staffordshire Police and the Audit Commission on this investigation”.

“I will not comment on these suspensions but I want to be clear that I expect officers at Stoke-on-Trent City Council to work to the highest standards of professionalism and integrity.

“The people of this city deserve no less.”