Hull council first got a licence to operate telephones in 1902

The new Liberal Democrat ruling group decided to sell the shares because the local authority was not making enough money on the investment.

It says it can more than double the return from £2.5m a year to £5m or £6m by investing in a diverse portfolio.

Its 30.6% stake sold for £107.1m to banks in the UK, US and Scandinavia.

The council's Labour group said: "The sell-off of the city council's last shares in Kingston Communications represents the end of over 100 years of public investment in and benefit from Hull's unique communications company.

"The decision was made very quickly after the Lib Dems secured a one-seat majority, probably to ensure they could do it before any further defections take away their lead."

We will not be embarking on a sudden spending spree Andy Sloan, KC shareholding committee spokesman

Speaking on behalf of the KC shareholding committee, Liberal Democrat councillor Andy Sloan, said: "The decision to sell the council's remaining stake in KC was made because it was in the best interests of the city, its people, local businesses, local shareholders, and indeed the company.

"Retaining a 30.6% stake in the local telecoms provider by the city council made little strategic sense to us.

"Given the yield of the shares, and the long-term growth strategy of KC, there was also little incentive for the council to deploy £100m of its scarce capital in a shareholding in one company.

"Whilst at this stage it is premature to discuss how this capital can be used for the long-term strategic benefit of the city, it remains the case that this capital can currently provide a better investment income deployed in a diversified managed portfolio."

Mr Sloan stressed that the money made from the sell-off would not be used to "splash out on councillors' pet projects".

"We have lived in an environment in Hull where the local authority has not spent money wisely and not got value for money," he said.

"Our objective is to manage the local authority better so we will not be embarking on a sudden spending spree."