A chief executive of a council-owned bus company has secured the backing of the authority following claims his own board of directors want him sacked over allegations of misconduct.

Edinburgh City Council, which is the majority shareholder in Lothian Buses, said it wanted "to restore stability" to the firm's boardroom on the back of the revelations, which have rocked the company for the best part of a month.

A letter published in an industry magazine and penned by Ann Faulds, former chairwoman of Lothian Buses, claims the board unanimously agreed to sack chief executive Ian Craig, who is paid £270,000 a year, following an investigation into his conduct.

It also claims the city council refused to back the board, prompting Ms Faulds to quit her post.

Edinburgh City Council has now ruled out sacking or suspending Mr Craig on the back of the latest developments.

Asked if there was any disciplinary action in the offing, a source said: "No. It's the council's priority now to get the board back on an even keel."

The row began when the executive directors lodged a grievance against Mr Craig, claiming he failed to consult them on major decisions and that he has an abrasive management style.

The claims were investigated by then-chairwoman Ms Faulds, but no disciplinary action was taken against Mr Craig. It later emerged she was in favour of his departure.

Following publication of Ms Faulds' letter, Lothian Buses insisted no formal board meeting had been held and denied the claims there was "unanimous" support to fire Mr Craig.

Ms Faulds resigned her post at Lothian Buses more than two weeks ago, with Edinburgh's transport convener councillor Lesley Hinds brought on the board, charged with getting the company back on track.

The directors who lodged the complaint are reported not to have been seen at the bus company's Annandale Street headquarters since Mr Craig returned to work following Ms Faulds' resignation.

One source said: "It's disingenuous to say all the directors wanted to sack Mr Craig. Some possibly did, but others were quite cross at that being said.

"In fact, no formal meeting was ever held. As for directors not turning up, annual leave has been a factor, as has illness."

An investigation had been carried out into Mr Craig's alleged "abrasive" management style, amid ­complaints from the three executives, operations director Bill Campbell, engineering director Bill Devlin, and finance director Norman Strachan.

No disciplinary action was taken against Mr Craig, who did not attend work at Lothian Buses HQ for 10 weeks during the investigation.

Now, Ms Faulds has claimed complaints against the chief executive had been "upheld" and there had been unanimous backing from the board to ask the council for consent to terminate Mr Craig's contract.

She wrote: "This request was made following a very detailed investigation, as well as full consideration and exploration of alternative options. The decision by the board to seek this consent was not taken lightly.

A council spokeswoman said: "The council, as majority shareholder, considered a request by the former chairwoman of Lothian Buses for consent to a proposal relating to a management matter. There was no unanimous decision of the Lothian Buses board in this regard, nor any board meeting.

"We have been encouraged by the progress already made by the board towards restoring stable and effective management arrangements and we will carry on providing whatever support and assistance we can to ensure the continued success of the transport companies."