Ken Bates had warned that the club's future was in doubt

The move comes five days after KPMG put Leeds up for sale because of a legal challenge from HM Revenue & Customs.

HMRC had mounted a legal bid to block Mr Bates' earlier attempt to buy back Leeds United and give its creditors just 8p in every �1.

It is unknown how much of the club's �35m debt Mr Bates intends to pay off.

I'd like to pay tribute to the Leeds fans Ken Bates

"We received several offers for the business which we considered carefully," said joint administrator Richard Fleming.

"The approved deal represents the best result for creditors in the circumstances and we believe provides the club with the best chance of survival."

'Gobsmacked'

Following the announcement, Mr Bates insisted the club was "in a good position".

"I'd like to pay tribute to the Leeds fans because after everything that has gone on - and people making innuendoes about season ticket money and that sort of thing - they just kept on paying the money for the tickets," he told Sky Sports News.

606: DEBATE Your reaction to the news from Elland Road

Rival bidder, businessman Simon Franks - who had joined with property developer Simon Morris - said he was "gobsmacked" to miss out.

Obviously I'm very disappointed," added Mr Franks.

"It's been a torturous process and we put together what we thought was a very brave bid."

Relegated

KPMG had earlier said that unless the club was able to leave administration, the Football League may not let it start the new season.

Ken Bates first took control at Leeds in January 2005 when he bought a 50% stake in the club.

He took on a club struggling with giant debts which had been built up during heavy spending on players in 2000-2002.

Despite an extensive cost-cutting programme, Mr Bates was unable to turn around Leeds' finances, and in May of this year the club went into administration, as well as being relegated to League One.

Mr Bates initially got backing from Leeds' creditors to buy the club back from the administrators and give them just 1p in every �1 owned.

Mr Bates then increased his offer to creditors to 8p in every �1, but this was not enough to prevent HMRC, which is owed �7.7m in unpaid taxes, mounting a legal challenge.

It has not yet been disclosed how much Mr Bates will now offer HMRC and other creditors.