Greg Wood reports on the reaction from York racecourse

Before the 1997 general election Mr Cook, a keen racing fan, gave a cast-iron guarantee that the Tote would stay in public hands if Labour was elected.

"There will be no proposal by Labour to sell the Tote. I can authoritatively put down the curtain on this story," he said.

But Home Secretary Jack Straw has announced in a Commons written reply that the organisation will be transferred to the private sector.

Foreign Secretary Robin Cook got the odds on privatisation wrong

Privatisation is expected to bring in up to £150m to Treasury coffers, even though the Tote is not owned by the government.

Mr Straw said that he had approved the sell-off on the recommendation of an 11-month review conducted jointly by the Home Office, the Treasury and the Tote itself.

The review examined four options - maintaining the status quo, transferring the Tote to racing as a gift, giving the pool betting side of the operation to racing and selling the rest, and a full sell-off.

Greg Wood: "In terms of its size, the privatisation is insignificant"

Mr Straw said he believed a total sell-off was the best way to ensure the Tote's future success.

He said: "Free from its existing status as a public body, the Tote will be better placed to maintain flexibility and meet its commercial aspirations.

"The Tote's status as a non-departmental public body has served it well in the past but has become increasingly anomalous as it has become more of a commercial operation."

Mr Straw said that the method of a sale had not been decided, but said the privatisation would require legislation.

"The interests of the taxpayer will be taken fully into account in considering the various sale options, which include the possibility of a sale to racing," he said.

Racing moneyspinner

Privatisation is sure to be controversial as the Tote currently ploughs most of its annual £12m profits back into the racing industry.

Many in the sport believe that investment is essential and fear it will come to an end after the sell-off.

Liberal Democrat home affairs spokesman Alan Beith said Mr Straw had failed to provide any assurances on that point.

Jack Straw has been urged to ensure the Tote continues to invest in racing

"The home secretary has failed to guarantee that jobs in the racing industry will continue to be supported by revenue from the Tote," he said.

Concern was also expressed by bookmaker Victor Chandler.

"I hope it doesn't damage racing as the money it contributes is needed, " he said.

"To me the only way is to pass it on to some sort of trust managed by the British Horseracing Board.

"Otherwise I don't see how it could work - who would want to be a shareholder in a company whose profits didn't go the shareholders but to racing?"

Although the government does not own the Tote it exerts control over it through the composition of the Board of Directors.

The Commons Home Affairs Committee said in 1991: "At present, no-one owns the Tote. Its legal status is that of a 'body corporate with perpetual succession', and the members of the board are the Tote."