ITV news programme Central Tonight is set to merge with its Nottingham counterpart - sparking fears of more Birmingham job losses.

ITV bosses yesterday unveiled plans for one regional news programme covering the entire Midlands area as part of national network streamlining plans.

The national broadcaster announced in a letter to staff that it was proposing to regulator Ofcom a cut from its 17 separate regional news programmes to just nine.

Currently, ITV airs two separate programmes in the Midlands, one for the West Midlands - hosted by Bob Warman and Joanne Malin - and another for the East Midlands.

The letter from ITV chairman Michael Grade said: "As we move towards a fully digital market with all the commercial challenges that brings we have to make sure that ITV remains competitive. The commercial reality is that we're spending more on regional news than can be commercially justified.

"ITV currently spends #120 million a year on its regional services, the majority on regional news. We believe a more realistic obligation on ITV would create savings of #35 million to #40 million a year."

The proposed merging of Central Tonight with its Nottingham operation follows a string of cutbacks in recent years. In February 2004 ITV Central announced 400 jobs were being shed across its Birmingham and Nottingham operations.

Michael Jermey, director, ITV Regions, said: "There are people out there who argue that ITV should get out of regional news. We do not want to do that - we are absolutely committed to high quality regional news."

Broadcasting union Bectu is set for talks with Central management over the proposals.

Bectu supervisory official Sharon Elliott said: "The announcement is another kick in the shins for ITV's regional news staff who work long and hard to produce good quality output that regional audiences appreciate."

It called on broadcasting regulator Ofcom to take action over the issue.

Paul McLaughlin, national broadcasting organiser of the National Union of Journalists, said: "ITV has a strong history of public service broadcasting in the UK. This would drastically reduce local news in the UK.

"This is a vital service for viewers and ensures that politicians and local organisations are held to account.

"The union opposes any reduction in the quality and service to viewers and we are calling upon all those who care about the future of quality broadcasting to back our campaign."

Mr Grade further raised the spectre of job cuts after saying that ITV1 would not be given any budget increase.

He said: "We can definitely make the money go further. "Inevitably, I'm sure that there will be have to be some redundancies, but at this stage I'm not sure it is helpful to start throwing numbers around."

He pledged to invest in original programming under a "self-help" plan to revive the broadcaster.

Mr Grade said he wanted the broadcaster to be the UK's favourite source of free entertainment by 2012 as he unveiled plans for self-funded, "content-led" growth.

ITV said advertising revenues continued to improve in the third quarter - up two per cent at flagship channel ITV1 and five per cent across the group.

Mr Grade, who is the company's executive chairman, will also phase out ITV Play's call TV programming by the end of the year after the bad publicity over the apparent "duping" of viewers by broadcasters across the industry.

Mr Grade, who rejoined ITV nine months ago after former chief executive Charles Allen resigned last year, said he wanted to "maintain and accelerate" ITV1's recent ratings improvement.

The broadcaster is launching a new peak-time strategy to improve ITV1's performance in the key 9pm weekday slot, although there will be no extra cash for programming.

Mr Grade said: "We believe ITV1's recovery can be achieved within its existing programming budget."

ITV is, however, investing an extra #20 million in fast-growing digital channels, with the target of ITV2 overtaking rival Five as the third most popular commercial network for 16 to 34-year-olds.

The executive chairman reaffirmed the target of the group's network of channels achieving a 38.5 per cent share of commercial impacts - audience share - by 2012.