Dudley’s bid for city status showed the borough “punches above its weight” despite its failure to win the historic contest, council leaders said.

They spoke of their pride in the town’s application to become a city, after the winners of the competition were announced by Nick Clegg, the Deputy Prime Minister.

Chelmsford in Essex, Perth in Scotland and St Asaph in Wales have been awarded the right to call themselves cities by the Queen, in honour of her Diamond Jubilee.

Dudley was one of 22 applicants which did not receive city status – but civic leaders remained upbeat.

Council leader Les Jones said: “There is still much to celebrate in our borough, and that is the reason why we submitted our bid for city status. It has been an opportunity to celebrate our past and highlight the ambition we have for our future.

“Of course, we always knew there was a lot of competition for city status, but I am very proud we have been able to use this as an opportunity to show that this borough regularly punches above its weight.

“Our bid generated local, regional and national coverage in the media, much of which has highlighted the fantastic tourism, business and cultural heritage the whole of the borough has to offer.”

Councillor Angus Adams, cabinet member for regeneration, added:

“We are pleased with the opportunities the city status bid has brought us, but we will continue to plough ahead with exciting plans to bring in more visitors, create more jobs and kick start more investment into this borough.

“We are ambitious about our future, which includes a £300 million programme of regeneration set out for the borough.”

And John Polychronakis, chief executive of Dudley Council, said: “I would like to thank everyone who supported the bid, and recognised the unique heritage and enormous potential this borough has to offer.

“We are all looking forward to a very important calendar year with the Queen’s Diamond Jubilee and the Olympic celebrations here in the borough.”

MP Ian Austin (Lab Dudley North) said: “I’m disappointed. This could have been a catalyst to attract new investment, new trade and new jobs.

“Like everyone who grew up in Dudley I can remember the town’s better days, but I refuse to accept that our best days are behind us.

“We need a new plan. I want to see concerts and plays in the castle and I want to see a university campus in Dudley. Above all, we need new ideas to attract new investment and new jobs.”

Dudley’s bid document claimed that the borough’s story “had its origin some 470 million years ago”, when limestone was laid down on what was then the bed of a tropical sea.

It explained: “This geological legacy helped create the landscape we love and the raw materials that helped inspire a revolution that shook the world,” referring, of course, to the industrial revolution.

The bid highlighted Dudley’s iconic buildings, from the new Dudley College to historic Dudley Castle, as well as the borough’s “reputation for warmth and hospitality”.

One section focused on Dudley’s famous residents, ranging from Abraham Darby, the father of the Industrial Revolution, economist Thomas Attwood, war hero Frank Foley, footballer Duncan Edwards, Lenny Henry and Led Zeppelin singer Robert Plant.

Although city status is awarded by the Queen, the winners of the contest were chosen on advice from Mr Clegg in his roles of Deputy Prime Minister and Lord President of the Privy Council.

He said: “The standard of application was very high, and those who missed out should not be downhearted. I hope the competition has given the residents of all of the places which applied a sense of civic pride, of collective ownership and of community spirit.”

Armagh in Northern Ireland has been granted a lord mayoralty.