Last year, the council announced that the service would be among a number that it would run at the end of its 15 year outsourcing deal with supplier Capita.

But yesterday, the authority announced that it has appointed Northgate Public Services to run revenues and benefit software in a deal worth £1.6m.

A statement from the council said: “The council had originally been planning to transfer the software element of the contract back in house but following information from the market it has realised that better value may be had by going to a cloud offering to supply a revenues and benefits and document management system.”

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The current contract with Capita, which was worth more than £200m, was signed in 2001 and is due to end completely June. However, revenues and benefits services will begin to be run by Northgate from April.

Last year, the council said it was intending to run a number of services itself, including parking, design and print services and accounts for debtors and creditors.

It announced that it would seek to tender services including highways, transport and property.

Northgate fended off a bid from one other supplier to win the contract, the council said.