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The Commission for Racial Equality has called for a statutory youth service to promote cohesion in racially divided communities.

Poor funding has been blamed for the failure of youth services in Oldham, Bradford and Burnley to promote community cohesion before last summer's disturbances.

"Britain needs a publicly funded, statutory youth service," says the CRE report, which was published last week following a review of the towns in which ethnic groups often live in separate communities.

It finds that youth services tend to be segregated and that initiatives to integrate groups have often faded because of funding problems.

"Many youth projects do useful work but, when the funding stops, the effects of that work, and often the youth workers too, are lost to the community," the report says.

"Youth projects need statutory funding to secure staff and facilities and to launch long-term programmes that can tackle the racial prejudice that divides so many young people from one another."

The CRE has also called for a government-funded network of local community organisations to promote cohesion by bringing together people from different ethnic groups.

On Local Strategic Partnerships, however, the CRE has warned that, although they have the potential to promote cohesion, they also have the potential to increase resentment between communities.

Now in their second year, the LSPs in the 88 most deprived areas in England will focus their regeneration projects on small areas of little more than a few streets. As a consequence, funding for specific areas may appear to be for the benefit of a particular ethnic community.

"This can cause resentment by other communities in neighbouring wards," a CRE spokesperson said.

"Funding programmes along thematic lines would be one way of overcoming this problem. Funds would not be locked into particular geographical areas and could instead serve to unite neighbouring communities, while still being aimed at those most deprived."

The neighbourhood renewal unit said it would review the allocation process to ensure it was fair.

- A Place for Us All - Learning from Bradford, Oldham and Burnley, The Stationery Office, £5.