Ministers have given the go-ahead to create the UK's biggest teaching hospital trust, ending a two-year on-off merger saga.

Health secretary Frank Dobson confirmed last week that St James' and Seacroft University Hospital trust will merge in April with United Leeds Teaching Hospitals trust.

The new combined Leeds Teaching Hospitals trust will employ about 13,000 staff and generate revenue income of pounds430m a year. It is expected to save around pounds3m a year in running costs.

Ministers will now start the process of appointing a chair and non-executives to the trust board, after which a management team will be put in place.

Under guidance from the NHS Executive, the chief executive's post does not have to be nationally advertised.

Suitable local candidates may be considered for the job before it is more widely advertised, United Leeds assistant chief executive Steve Andrew said.

It is widely believed United Leeds chief executive Stuart Ingham will step aside, leaving the way open for Mr Andrew and St James' chief executive, David Johnson, as well as other candidates.

Mr Andrew, a 42-year-old former independent management consultant, did not rule out going for the top job.

Mr Johnson, who is 40 and well respected as a 'quiet but firm negotiator', told the Journal he had already indicated he was interested in running the new trust.

Insiders believe there could also be competition from Leeds HA chief executive Ron De Witt, also in his 40s.

Both trusts and the HA said they were pleased the merger was finally to go ahead and believed it was the best way forward for health services in the city.

An HA spokesman said that, whatever the outcome of the review of acute services, which is being formally consulted on until 27 February, it would be easier to implement if there was just one trust.

But one source claimed there was still a lot of 'horsetrading' to be done because of vested interests, particularly among the medical profession.

The mega-merger, which was first mooted in April 1996, has been dogged by controversy from the beginning.

The previous Conservative government was thought to oppose it because it would create such a powerful monopoly provider. But the Labour government is believed to have had a hand in resurrecting the idea.

Retired East Riding HA chief executive George Barnes was brought in last year to take the initiative forward. His role is now over, but the move was regarded as an attempt to bring a degree of objectivity to a sensitive issue.

But not everyone is in favour of the merger. Leeds community health council opposed the plans on the grounds that the benefits were not proven.

Harrogate and Pontefract CHCs also opposed it.