Police chiefs today admitted more than £5 million of taxpayers’ cash invested in the collapsed Icelandic banking system may never be clawed back.

A new report by West Midlands Police finance chiefs reveals the authority has £5.4 million of investments frozen in Landsbanki.

It was one of a number of public bodies, including Wyre Forest District Council, which pumped millions into Icelandic banks on the promise of high returns.

Today it emerged that a senior figure in the region’s police authority spoke to Policing Minister Vernon Coaker to call for more help following the collapse of Iceland’s economy last year.

In a report due before a meeting of police authority finance chiefs on Thursday, police authority treasurer Mike Williams reveals: “The Icelandic government has stated its intention to honour all its commitments as a result of their banks being placed into receivership.

“Presently, it is not possible to say with any certainty that we will recover the entirety of our investments or when a reimbursement may be made.”

Wolverhampton Councillor Bob Jones, who sits on the audit committee and is chairman of the Association of Police Authorities, met with Mr Coaker on Tuesday of this week to discuss the problem.