The deputy leader of Birmingham City Council has confessed to being "over-whelmed" by the improvement in the local authority's services in 2007.

Paul Tilsley, in his annual report, said the council was well on the road to excellence and would soon qualify for three stars from Government inspectors - indicating good performance.

Coun Tilsley (Lib Dem Sheldon) added: "We are constantly improving. We have become a two star council and this is an excellent achievement. We have in no uncertain terms moved away from being labelled as a weak authority and I expect we will continue to improve on the two stars we have. Our continuous strive for improvement encourages me."

Coun Tilsley said he wanted to establish Birmingham as the "incontestable second city" in the UK. He said: "I think the challenges are considerable but I believe we have put in place the means by which we can improve on all fronts." He promised Birmingham would become an "exemplar" of sustainable building, highlighting the combined heat and power plant in Broad Street which is already producing savings and cutting carbon emissions.

He added: "Making better use of resources, encouraging growth and prosperity whilst containing and reducing our global footprint are major challenges for us all and require innovation and commitment

and clearly the city council has a key lead-ership role to play." He was proud that the Audit Commission had ranked Birmingham in the top 30 per cent of councils for the delivery of 120 key performance indicators.

The council's business transformation project, which seeks to save £10 billion over ten years through efficient ways of working, was leading the way in the UK, he said.