Mondeo Mk3 Heater Problem

[bluesntwos]

I have a 2004 (Facelift) Mondeo 1.8 LX Mk3. It has a simple heater set up with just hot/cold buttons and a fan (i.e. not climate control). At the moment the heater only seems to do red hot and ice cold. It won't settle on an intermediate temperature and even one press of the button can turn it from hot to cold. Curiously, sometimes when you lower the temperature, you can here a noise from the dash which sounds like a clock ticking which lasts for about 20 seconds. I am stumped as to how to fix this as it is obvious that the heater and fan are working ok. I am thinking there may be a thermostat somewhere but any advice would be gratefully received. It does the same whether A/C is on or not.