Oxford could be declared the European City of Culture in 2008. City councillors are liaising with the county council, Southern Arts and Oxford's two universities to prepare a £100,000 bid to get the British nomination.

Southern Arts has told councillors that Oxford has been chosen as the best candidate for the south but warned that they can expect competition from other cities in the UK.

Council officers in Glasgow say the celebration of culture in 1990 brought millions of pounds of investment to the region and put the city on the world map.

Liberal Democrat city council member Jim Campbell said the local authority was prepared to contribute £20,000 towards funding the bid and was now waiting for the other organisations to commit themselves to the project.

He added: "A meeting will take place on March 9 where all the different parties can get round the table to discuss the best way forward."

Fellow city councillor Jock Coats said that Oxford would face stiff competition from other cities, including Newcastle and Bradford.

He said: "Once all the bids have been submitted, the Department of Culture, Media and Sport makes a decision and puts it forward to a panel of judges in Europe.

"This would be very good for the city and would bring investment. When Glasgow was City of Culture in 1990 they gained a great deal from it. One thing Oxford lacks is a good concert hall."

Southern Arts spokesman Juliet Mills said: "Oxford is already a major cultural capital and we recognise a great opportunity to make this happen.

"We will be making some kind of financial contribution and are very supportive."

Economic development officer for Glasgow City Council, Keri Isdale, said: "The effects of being selected as the European City of Culture 1990 are continuing to be felt in 2001.

The private sector commitment to arts events and 1990 projects was valued at £6.1m. Perceptions of the city at home and abroad were improved."