Liverpool was today named as the European Capital of Culture for 2008, beating the favourites Newcastle/Gateshead.
The news, announced by Culture Secretary Tessa Jowell, was greeted by scenes of jubilation in the winning city and disappointment in the runner-up cities, which also included Birmingham, Bristol, Cardiff, and Oxford.
Ms Jowell said the competition to choose the city had been "fantastic" and all the bids had been of the highest standard.
Liverpool will now hope to reap the benefits and the image change Glasgow enjoyed when it won the title in 1990.
Louise Ellman, the Labour MP for Liverpool Riverside, said: "This is a magnificent boost for Liverpool but it is also a challenge. We must use this opportunity to make the arts the centre of our regeneration as a top class European city."
EU member states take turns to nominate a city to hold the title.
An expert panel chaired by former Royal Opera House chief Sir Jeremy Isaacs weighed up the rival merits of the shortlist of six.
After making the announcement in London, Ms Jowell and Sir Jeremy were travelling to the winning city bearing a letter from Prime Minister Tony Blair confirming the nomination.
The news was greeted with shock in the north east, where civic leaders had gathered at a small primary school in the Newcastle suburb of Walker.
In Cardiff, Wales's culture minister Alun Pugh expressed disappointment but congratulated Liverpool on its success.
Liverpool, which will celebrate its 800th birthday a year before the cultural jamboree, has a rich artistic heritage which takes in everything from the Beatles to the Royal Liverpool Philharmonic Orchestra.
It is well–endowed with museums and galleries, many built during its heyday as one of the main ports of the British Empire.
But economic decline during the 20th century has left it in need of the kind of boost cultural capital status may bring.
Ms Jowell told a news conference in central London: "It has been a fantastic competition and all the bids by the cities have been of the highest standard.
"Any city could be the nomination for the capital of culture in 2008."
There were gasps and a smattering of applause as she announced the winner as Liverpool.
Sir Jeremy said it was a "very, very tough decision.
"Taken overall Liverpool looked good, sounded good, feels good to be in and would deliver a really terrific year," he told the news conference.
"If one had to say one thing that swung it for Liverpool it would have to be there was a greater sense there that the whole city is involved in the bid and behind the bid."
He added: "A little bit of extra zip from the fan club helps."
Ms Jowell said she and Sir Jeremy, the former head of the Royal Opera House and ex–chief executive of Channel 4, would go to Liverpool later today with a letter from Prime Minister Tony Blair.
She said the other shortlisted cities should feel proud of their achievements and added that the Government would work with them to try to ensure that some of the developments highlighted in their bids were still realised.
"Yes, there will be Government support, yes, there will be a small amount of money to help these cities to work together to kick–start some of the developments they hope to see," she said, adding that a further announcement would be made in July.
She said: "Liverpool is a worthy winner of this honour.
"Their vision, passion and enthusiasm – coupled with a really spectacular year–long programme – impressed the judges, who chose them from a very strong field."
Ms Jowell said the city's name would now go forward to the EU, which would formally respond next year.