WINCHESTER civic chiefs have blown the chance to use a six-figure government grant to help the homeless.

A desperate race against the clock to find sites to develop by next spring has ended in failure, the Daily Echo can reveal.

About £500,000 was available for building four new hostels, but only if they were completed by April 2004.

Currently only one of the originally proposed hostels is earmarked to go ahead - for ex-offenders in Fivefields Road, Highcliffe.

Its future is uncertain following a ferocious public campaign to the planning application.

Plans for three other new hostels, in Gordon Avenue, Highcliffe, and Fox Lane and Thurmond Crescent in Stanmore, were dropped after opposition in the spring.

To salvage part of the grant, the city council has devised a scheme to convert part of the existing Sussex Street hostel.

The Liberal Democrat-controlled council was told by the Housing Corporation that the money from its safer Communities Scheme would still be available if the buildings were finished by April.

Housing bosses launched a frantic hunt for new sites in a bid not to waste the £500,000 grant. But senior city councillor, Dominic Hiscock, admitted the search had been in vain.

Mr Hiscock, the Cabinet portfolio holder for housing, said: "We won't now get funding for these other sites. They had to be completed and up and running by April.

"Those plans have fallen by the wayside. But the need and requirement for them hasnt. We have a number of sites that we are investigating.''

The news is a blow to the city council as it must now itself fund the hostels.

The 2002 Homelessness Act forces councils to house vulnerable people such as ex-offenders, teenagers leaving council care, single mums and ex-soldiers.

The loss of the £500,000 was caused when the council launched "community planning'' exercises in Stanmore and Highcliffe but failed to tell the residents about secret plans for the hostels.

The resulting furore forced council leader, Sheila Campbell, to make an embarrassing public apology and drop plans for three sites.

Councillor Patrick Davies, Labour group leader, said: "It's sad that we have lost funding. It is another piece of evidence of total incompetence. The whole thing has been badly handled.

"The sadness is that the clients we are trying to help are still there. Now the government grant has been lost, local people will have to pay,'' said Mr Davies.