Tessa Jowell has announced that Liverpool is to become the 2008 European Capital of Culture.

The culture secretary travelled to the city to hand over a letter of congratulation from the prime minister.

Liverpool triumphed over five other cities - defeating a strong bid from Cardiff.

"Liverpool is a worthy winner of this honour. Their vision, passion and enthusiasm - coupled with a really spectacular year-long programme - impressed the judges, who chose them from a very strong field," said Jowell.

"Indeed, the judges made it clear that each and every one of the six short-listed cities would have been a worthy nomination for the title."

The announcement was met with loud cheers in the Merseyside city.

''The judges have given the green light to the most exciting Capital of Culture Europe has ever seen," said Sir Bob Scott, Liverpool's 2008 bid leader.

"This is a momentous day for the people of Liverpool, the North West of England and the whole of Britain. Liverpool is at the beginning of a thrilling renaissance.

"This honour is the rocket fuel to propel us to be one of Europe's premier cities. We have work to do, but we have the vision, desire and the belief to deliver a year of culture Britain will never forget."

It is thought that the move could result in 14,000 new jobs in a city scarred by decades of urban decline.

City council leader Mike Storey said it was "a proud day for the new Liverpool".

"It's like Liverpool winning the Champions League, Everton winning the Double and the Beatles re-forming all on the same day - and Steven Spielberg coming to the city to make a Hollywood blockbuster about it," he said.

"This decision means so much to the city. It gives us the opportunity to bring real change for the better. This honour will help transform our city for good.

"A lot of people have worked very hard to deliver this bid and they deserve huge congratulations. But this is a day for the people of Liverpool to celebrate. We are all winners today."

Liberal Democrat leader Charles Kennedy said: "I warmly congratulate Liverpool on winning City of Culture status.

"It is a fantastic vote of confidence in this great city and all those who contribute to its historic and ongoing vitality.

"I know very well the tremendous boost which City of Culture status achieved for Glasgow.

"I am sure it will be the same story for Liverpool. I look forward with eagerness to my next visit."

Welsh secretary Peter Hain said Cardiff could still benefit despite losing out to Liverpool.

"The government will now give Cardiff extra backing to build on the strength and success of its bid to ensure the quality and talent which has been unleashed is not lost, but is taken forward," he said.

"Cardiff has been given a tremendous impetus to artistic and cultural activity in the city and we must now build on this."