The Liberal Democrats are set to take control of Oxford City Council next week the first time a single party other than Labour has run the Town Hall in 25 years.

Discussions have taken place between the main political groups this week in the hope a coalition deal could be struck, but the Oxford Mail understands the issue of housing has proved a major stumbling block on each occasion.

Labour, which before last week's elections ran the council with a minority administration, is not prepared to budge on the issue of building thousands of homes in Oxford's Green Belt.

That effectively ruled out the possibility of a joint administration with the Greens.

As a result, the Mail understands that Labour, under new leader Bob Price, will officially relinquish its minority administration at next week's annual council meeting and let the Lib Dems now the largest group take control.

The Lib Dems have run the council before, but in a coalition with the Greens between 2000-2002, in what was largely regarded by both parties as a mistake.

It was the only break in Labour's 25-year stint in charge of the city council, while the Lib Dems have never run the authority single- handedly.

Lib Dem group leader John Goddard said: "In discussions so far, I don't think any group has suggested there should be a coalition of any two groups.

"I think it's looking increasingly likely the Liberal Democrats will form a minority administration."

At last week's city council election, the political landscape of the Town Hall changed with the Lib Dems becoming the largest group with 19 councillors.

The council is still hung, with no one group in overall control, but Labour has decided enough is enough, especially since former leader Alex Hollingsworth and a raft of other councillors quit.

Labour's new deputy group leader Ed Turner said: "The election result didn't put faith in any one party, but the Liberal Democrats are the largest party, so what is likely is a minority administration with Labour and the Greens providing a strong role in the scrutiny process."

It is still possible, but extremely unlikely, the city council could be run by a so-called 'traffic light' coalition that would feature a decision-making executive committee of representatives from the Lib Dem, Labour and Green groups.

Green leader Craig Simmons said: "We think it's best to have a traffic light coalition because we have to learn to work together so let's start as we mean to go on."

The Independent Working Class Association, which now has four city councillors, is not part of power-sharing discussions because of the size of its group.