The decision by the developers of Anglia Square to pull out of the £300m revamp is a "terrible blow" for Norwich, the city council's leader has said.

Developers Weston Homes announced a string of factors, including delays, inflation, rising costs and government decisions had rendered the scheme, for up to 1,100 homes, unviable.

Eastern Daily Press: Norwich City Council leader Mike StonardNorwich City Council leader Mike Stonard (Image: Copyright Archant Norfolk 2016)

Mike Stonard, leader of Labour-controlled Norwich City Council, said: "This is a terrible blow for the city and many of our residents.

"The overall benefit of this scheme was clear – the comprehensive redevelopment would have transformed one of the most deprived areas of the city and one of the top 10pc of most deprived areas in the country.

Eastern Daily Press: Anglia Square in NorwichAnglia Square in Norwich (Image: Antony Kelly)

“In real and practical outcomes, regeneration of this part of the city would have provided up to 1,100 much-needed homes, including affordable housing, along with job opportunities and the creation of public open spaces.

“The boost to the local economy was equally undeniable, with the estimated residential growth expected to bring in between £21.9m and £36.4m a year to the Norwich economy.

“Despite Weston Homes’ announcement, Anglia Square remains the most significant development opportunity in the northern part of the city and one of the council’s most important priorities for regeneration.

“We will do all we can to attract new developers, despite the current challenges of the UK economy which we are all living through."

Eastern Daily Press: An artist's impression of what the public area of Anglia Square would look likeAn artist's impression of what the public area of Anglia Square would look like (Image: Weston Homes)

Mr Stonard said Weston Homes and the Anglia Square scheme were "casualties of the mismanagement of the economy by the Conservative government".

He said: "What Norwich needs, as with many other cities around the UK, is government funding and a focus on urban regeneration.

"This is essential for attracting inward investment from developers who want to make a positive contribution to our city and help us to create the kind of opportunities where people across all of our communities have an equal chance to thrive.

"A new Labour government is urgently needed to address this."

Eastern Daily Press: Green city and county councillor Jamie OsbornGreen city and county councillor Jamie Osborn (Image: Jamie Osborn)

Jamie Osborn, Green city and county councillor for Mancroft ward, which Anglia Square is within, said: "Anglia Square is a hugely important part of Norwich, and the city council will now have to work closely with the local community and businesses to decide on its future.

"Norwich urgently needs affordable and decent-quality housing which can provide homes for families, while respecting the city's heritage and the values of the local community. Any future for Anglia Square must fulfil those objectives."

Norwich City Council's decision to exempt Weston Homes from paying a tax on development - known as the Community Infrastructure Levy - had caused controversy.

Eastern Daily Press: Independent city councillor Karen DavisIndependent city councillor Karen Davis (Image: Ella Wilkinson)

Karen Davis, a former Labour city councillor who quit to become independent, was among those criticising the stance.

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Ms Davis said: "As predicted, your Town Close independent councillors knew this was a white elephant that would never be finished, as it would become "unviable" part way through.

"We said all along that millions of pounds of public money would not guarantee this project was ever completed. And now, you can see for yourself.

"What a waste of time from the Labour cabinet, sucking up to developers only to be dumped upon.

"This site has been left to rot by the owners for years, now the council has a chance to seek funding to compulsory purchase the site and redevelop it for the people of Norwich, not fat cat developers."