Confusion today surrounded a council inquiry into whether a community group had properly spent its grants.

The new twist followed a further letter from chief executive Ian Stewart to Ravenscliffe and Greengates Association.

As reported in yesterday's Telegraph & Argus, Mr Stewart had written to the association to ask it why it had failed to return £17,700 in grants which the council believed was unspent, or let the council see its accounts.

But Mr Stewart has now written again to the association to say that part of his letter may have resulted in a "misunderstanding".

In the letter he says he should have used the words "allocated" or "awarded", rather than paid.

A copy of the original letter was shown to members of the Newlands partnership.

Association chairman Dominic Sheer-an later denied the contents, welcomed the inquiry and said he was looking forward to meeting Mr Stewart. He said today: "I believe the chief executive is an honourable man and this letter proves that information given to him about the RGA was incorrect. But why did a copy of the first letter go to the Newlands Partnership Board when we have never received a penny from them - which itself is under investigation?

"I believe we have been singled out because we have been asking embarrassing questions about the Newlands Partnership."

Mr Stewart is in the process of appointing an independent investigation into the Newlands Partnership after anonymous allegations on the Internet about membership. Today he said he would be happy to meet representatives of Ravenscliffe and Greengates Association to discuss the matter.

Neither Mr Stewart and Mr Sheeran would say whether the association had received the money.

The council also wants the probe to cover a £500,000 grant allocated to five estates in the Newlands area before the partnership was set to deal with £17 million from the Government's Single Regeneration Budget.