Gates' first number one hit was a cover of Unchained Melody

Gates, 21, who finished as runner-up to Will Young in the 2002 TV competition, has been told his third album will not be released by the label.

He notched up four number one singles but his second album, released in 2003, had disappointing sales.

A spokeswoman for Gates's management firm 19 said the company was working on the singer's "exciting future".

The spokeswoman said: "We can confirm that, sadly, Sony BMG have decided not to renew Gareth Gates's record deal.

"19 Entertainment, however, will continue to work closely with Gareth and support him on what we believe to be an exciting future and we look forward to revealing further plans for him soon."

Album flop

The singer, from Bradford, West Yorkshire, was tipped to win the Pop Idol competition but was beaten by rival Young, who has gone on to have a successful pop career.

Gates's number one hits included Anyone of Us (Stupid Mistake), Long and Winding Road, a duet with Young and Spirit in the Sky.

The singer, who has a stammer, was considered a pin-up by the show's younger viewers.

His second album Go Your Own Way dropped to number 73 in the charts only a month after it was released in 2003.