The group reluctantly threw in the towel this week after the Government threatened to withdraw a £100 million investment already promised to fund the rebuilding and refurbishing of numerous other city schools.

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The storm broke when Labour schools minister Jim Knight effectively vetoed the Lib Dem proposals – which included bargaining £25million of city council money in exchange for keeping the promised investment intact.

In the ensuing row both parties accused each other of playing politics with children's education.

But now the Lib Dems have reluctantly admitted defeat and backed down, throwing a final punch with their accusation that the Labour Government is guilty of blackmail.

"It's with deep regret that we have been forced into this position," said Coun Andrew Sangar, cabinet member for children's services.

"After fighting for over two years, trying our hardest for a two-school solution, defeat is difficult to take. But we have exhausted all the options and come to a point where, if we don't go ahead, other Sheffield schools would lose £100 million of much-needed investment."
The group came up with its £25million offer in a bid to win Government backing for a two-school solution – which they claim is preferred by a large proportion of the local community.

The issue was a key factor in returning the Lib Dems to power in the May council elections.

"It's deplorable that the Government turned us down despite the fact we put up the extra funding up," said Coun Sangar.

"It's clear that the decision was politically motivated and influenced by Labour locally and nationally. The Government's position would have been the same no matter what we did.

"I'm sorry that the Labour Party have ignored the wishes of local people and have effectively imposed the closure. This is a sad day for the Hillsborough community, who will lose an excellent local school thanks to Labour."

The matter will be finally put to rest at next week's council meeting when Coun Sangar publicly condemns the Labour Government "for effectively blackmailing Sheffield" and "regrettably accepts" the merger of the two schools.

The official 'proposing group' is currently drawing up plans for the merged foundation school, which will be built on the Myers site at Stannington. It is due to open in 2011.