In his statement, Mr Penning said: “In the light of the consultation, I find there are persuasive arguments that this level of repayment would be insufficient to reflect the adverse impact on competition with other ports.

“I therefore intend shortly to seek independent advice on a more appropriate figure. I will report further to the House when I have reached a decision on the DfT objection.”

In a sign of further payment problems, Mr Penning added: “As Liverpool City Council is aware, turnaround operations would also require state aid clearance from the European Commission.”

Last night Andrew Moffat, Port of Tyne chief executive, said: “We have been involved in the consultation and support the British Ports’ Association view of the matter.

“We welcome this interim statement from the Government and look forward to the outcome in due course.”

North East Conservative MEP Martin Callanan, who has fought for the cash to be repaid, said: “I remain of the view that if Liverpool City Council wants to tear up the agreement it happily entered into, all of the public subsidy should be repaid. I will continue to put this case to both the UK Government and the Commission. “My priority is to see a level playing field and to protect jobs on Tyneside.”

ABP port director Southampton, Doug Morrison, also pushing for a strong Government line, said: “This is broadly a positive announcement.

“The Government acknowledges its legal obligation not to lift the restriction before state aid clearance by the Commission and therefore the repayment of both UK and EU grant funding. It is not clear what ‘independent advice’ the Government will seek, but we expect to learn more details of this in due course.

“It remains our firm view that all of the public subsidy should be repaid in order to deliver an outcome that is in line with the Government's ports policy which supports a fair competitive playing field.”