Nottingham city council has passed a report into the misallocation of council housing in Nottingham to the police.

The local authority said it was up to the police to decide whether to investigate the findings of the report.

The report, published today by the Audit Commission, reveals widespread abuse of the system for giving council houses to tenants in Nottingham.

The watchdog investigated housing allocations at Nottingham City Council and Nottingham City Homes over three years.

Its report says employees of the housing service, as well as relatives, partners and associates were given houses they should not have had.

Tens of thousands of pounds of public money was spent improving wrongly allocated houses – and some were then bought under the right-to-buy scheme and a councillor lied to help two associates obtain a house.

In a statement issued this morning, the city council said: “The police have the report and it's a matter for them to decide whether an investigation is appropriate. We have said we would welcome and cooperate fully with any investigation. We will also be carrying out our own investigation and will present any further relevant information from that to the police.”

The Evening Post understands that the council’s chief executive Jane Todd has spoken to the chief constable of Notts Police Julia Hodson and the leader of the council Coun Jon Collins has discussed the matter with Divisional Commander for Nottingham, chief superintendent Shaun Beebe.

A Police Spokesman said: “Nottinghamshire Police will be seeking a copy of the full Audit Commission Report and speaking with the Audit Commission in order to determine whether or not there are grounds to commence a Police Investigation.

“There is no investigation underway at the present time.”

The report says investigators found a dysfunctional organisation, where staff did not dare question senior managers and employees ignored rules and policies.

It estimates almost 3,000 homes were either allocated outside of the normal 'points-based' system, or it had not been properly applied, between 2003 and 2005.

It only investigated a small sample of cases and identified nine where investigators had serious concerns.

No one has been named in the report.

Since 2005, all senior managers at Nottingham City Homes have left and the allocations system has been completely overhauled.

Council leader Jon Collins said: "I'm appalled. I expect local residents to be appalled. I'm confident that this kind of thing could not happen now but that does not excuse what went on before."

Notts Police is yet to comment on what it will do with the report