The government is considering taking control of Liverpool City Council in the wake of corruption allegations and the arrest of mayor Joe Anderson, Sky News understands.

Communities Secretary Robert Jenrick has confirmed he has received a report from local government inspectors investigating financial irregularities in the awarding of building contracts in the city.

According to the Telegraph, it is “likely” that Mr Jenrick will order commissioners to take over day-to-day operations in Liverpool because of a “damning indictment” of the council.

CONFIRMED: Communities Secretary @RobertJenrick has received Max Caller’s governance inspection report into Liverpool City Council. As per @christopherhope.

‘Next steps will be set out shortly’. These could include commissioners being sent in to run the council. pic.twitter.com/Z9TMHJHhne

Local government inspector Max Caller was appointed by Mr Jenrick to lead the investigation.

He has reportedly already briefed MPs in the area about the findings which will be published this week

Mr Anderson remains on police bail following his arrest in December last year on suspicion of conspiracy to commit bribery and witness intimidation.

The 63-year-old has insisted that the allegations are baseless and said he is suing Merseyside Police for wrongful arrest.

Deputy mayor Wendy Simon has taken over the role of Liverpool mayor on an interim basis while the investigation continues.

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