DEVELOPERS have pulled the plug on multi-million-pound plans to rejuvenate one of Southampton's oldest inner-city areas.

Gleeson Homes have abandoned a proposed development for 500 homes in the Chapel area following crunch talks with the city council and Southampton City College, which had hoped to build a new teaching block.

But civic chiefs are confident the project will still go ahead despite the setback.

As the Daily Echo revealed earlier this month, the housing element of the £30m plan, which also includes two business enterprise centres that are not affected, was plunged into turmoil when Gleeson hinted it was unwilling to pay the £9m asking price for the nine-acre site off Anderson's Road.

There were also concerns that it would not build as many properties for people who could not afford a mortgage.

After a crisis meeting on Tuesday, city regeneration chief Councillor Paul Jenks said: "The city council and the city college have announced that the development partnership relating to the Chapel site will no longer proceed with Gleeson Homes as the developer.

"All parties are disappointed that the current scheme is not going to happen but Gleeson has agreed to share information gained during negotiations with the council and the college to enable a future quality development to be progressed as quickly as possible.

"The council and college, whose partnership remains strong, will start work immediately to look at other schemes, possibly involving housing association partners, to be built on the site in Chapel."

City college principal and chief executive Lindsey Noble said: "I am disappointed and saddened by what has happened.

"But it is a delay not a cancellation of the building of our new teaching block.

"We are looking for a new developer and will continue working with housing associations."

The block would have been funded by cash raised from the sale of the land jointly owned by the college and the council.

Nobody was available for comment at Gleeson Homes.