Talks are under way between unionists on Belfast City Council after the Alliance Party, which holds the balance of power, received a huge surge of support in the local government election.

The DUP, which had 15 members returned, was holding discussions last night with the Ulster Unionists, the Progressive Unionist Party (PUP), and Frank McCoubrey, who ran as an independent, in a bid to ensure co-operation in the carve-up of power and retain an overall unionist majority at the City Hall.

“As it stands, under the d’Hondt system the UUP will get virtually nothing and neither would the PUP,” a senior DUP source told the Belfast Telegraph.

“Conversations have already taken place with the PUP, and senior figures within the UUP.

“Nothing is set in stone and nothing has been confirmed, but conversations are taking place regarding future co-operation.”

News of the negotiations came after the DUP and UUP formed a pact in Castlereagh to thwart the threat posed from a strengthened Alliance Party and retain the unionist majority.

In Belfast Sinn Fein, which gained two seats in the east and south of the city, retained its position as the largest party with 16 of the 51 elected members.

The DUP took 15 seats, while the SDLP stayed the same with eight.

The Alliance Party also increased its presence from four to six councillors — three of whom topped the poll.

However, the party, which first won the balance of power in 1997, said it would remain neutral and would take issues on their own merits.

Maire Hendron, who topped the poll in Pottinger, said neither nationalists nor unionists could be guaranteed support.

She said: “It has been said in the past that we have favoured Sinn Fein and the SDLP by one group.

“But, another would claim that we would favour the DUP and UUP. That’s not the case. We will continue to take each issue on its own merit and decide from there.”

One of the most emotive issues on which the Alliance Party will have to decide will be the flying of the Union flag over Belfast City Hall.

In the past Alliance has recommended the flag be flown on designated days.

It was a disastrous election for the Ulster Unionists, down from seven councillors to just its three best-known faces — Bob Stoker, David Browne and Jim Rodgers.

The PUP had both Hugh Smyth and Dr John Kyle returned.