Oxford's bid to become European Capital of Culture in 2008 has failed, judges revealed.

The picturesque waterfront in the city of Liverpool, which beat Oxford

A panel chaired by former Royal Opera House chief Sir Jeremy Isaacs weighed up the rival merits of Birmingham, Bristol, Cardiff, Liverpool, Newcastle/Gateshead and Oxford, and chose Liverpool.

When Culture Secretary Tessa Jowell told bid organisers that the title had been given to second favourites Liverpool, she almost forgot to mention Oxford.

Oxford Inspires chairman Paul Langford wished Liverpool well following its success.

But he added: "We felt we gave the panel a city with a distinctive agenda. This is two cities for the price of one.

"I cannot believe that you would find a square mile of city that would compare with us.

"I think out team did very well, but I think we were up against stereotypes.

"Obviously, we'll be meeting our stakeholders and we'll go ahead with our schedule and our own agenda, and we'll be up there with Liverpool in 2008."

Those who took part in presenting the Oxford bid said they were disappointed but still planned to carry out some of the plans contained in the bid document.

They were meeting at the Said Business School in Oxford to outline their plans after learning that they have lost the title. Maureen Christian, the city council's executive member for culture, said: "All is not lost.

"We have been recognised as a centre of culture and we are still planning a series of events, including a folk festival at the town hall in two years' time. "Considering we are the smallest city, we have done terribly well to be recognised as a centre of culture."

Oxford Inspires chief executive Robert Hutchison added that Oxford's bid did not have quite the same element of urban regeneration as other bids but stressed more quality of culture in the sciences and the arts.

He said: "We have a very strong culture of science including more research being carried out in Oxfordshire than anywhere else in the country and four of the best museums in England as well as superb art galleries.

"East Oxford also has a very strong multicultural society with a large Asian population."

Oxford Inspires were delighted to reach the shortlist of six cities last year but bookmakers made them 25/1 outsiders to win. There was major disappointment in Newcastle/Gateshead, favourites to win the bid.

After making the announcement in London, Ms Jowell and Sir Jeremy were travelling to the winning city bearing a letter from Prime Minister Tony Blair confirming the nomination.

The winners hope to reap the image change and boost to tourism which Glasgow enjoyed when it won the title in 1990.