Winchester may be forced to look a unique £1 million gift horse in the mouth - because it would be too difficult to spend.

The city council was left the money in 1995 on the death of Bapsybanoo Pavry, the last Marchioness of Winchester.

But frustrated civic chiefs fear the money may have to be returned because the terms of the Bapsy Bequest are too strict and the money insufficient.

The Indian-born daughter of a Zoroastrian high priest left £500,000 in her will for a new community hall at The Guildhall. The sum has now grown to a seven figure sum.

There were several strict conditions including the requirement for the hall to be a "community centre", either in or within the grounds of the Guildhall and to be called The Bapsy Marchioness of Winchester Memorial Hall.

The council has struggled since 1998 to draw up a plan which meets the demands of the bequest and the needs of 21st century Winchester.

Council officers identified a site off Abbey Passage for a two-storey extension. Possible uses included an art gallery, rehearsal rooms, studio, meeting place and IT centre. But a report to the city council Cabinet meeting tomorrow states that the project cannot proceed by just using the Bapsy money.

Steve Tilbury, director of community services, said there were several options including: a return of the bequest, a top-up with council funds, a look at another location and reconsidering the council requirements to a level that the Bapsy bequest would suffice.

Mr Tilbury said: "It would be premature to abandon the project before all avenues have been exhausted. This should only be a last resort if it is clear there is no workable or affordable option."

The Cabinet is being advised to agree a consultation meeting with key community organisations such as the chamber of Commerce, School of Art and the City of Winchester Trust.

A proposed design competition would have to be dropped as premature.

Councillor Jackie Porter, chairman of the community, arts and social performance improvement committee, will look into the options.

She said: "I would be very reluctant to give up the money. I would very much like to see it built. Bapsy gave the money in good faith. It would seem an insult if we did not spend the money."

Alan Weeks, chairman of the Winchester Residents Association, said: "To abort the project should not be an option. This was a bequest for the benefit of the citizens of Winchester. There is a need for it.

"The council seem to be creating difficulties for themselves which we don't recognise. A single-storey hall would not cost £1 million."

Bapsy was the wife of the 16th Marquess of Winchester. They married in 1952 when he was 90 and she was 51. Within weeks the marriage was over and he went off to live with Eve Fleming, the mother of James Bond creator Ian, until his death in 1962 aged 99.

Bapsy and Ms Fleming became bitter enemies with Bapsy suiing her rival for alleged enticement of her husband.

It is reputed that she made the bequest in 1953 to remind everyone who she was. She had been disappointed that outside a public function the youngsters waiting to see her were not waving flags and bunting as befitted someone of her social station.

She lived in London until returning to India in 1985.