A special school has missed out on a share of �2bn of government funding to pay for a new building, which would provide more space and improved facilities.

Chapel Road School, in Attleborough, had hoped to receive between �3.5m and �4m funding from the government's Priority School Building Programme, but was not one of the 42 schools picked from the 587 that applied.

However, the school's headteacher Karin Heap sounded a positive note and said the school would be working with Norfolk County Council and private investors to make sure the new building went ahead.

'We have identified a site for our new school and are naturally disappointed not to get a share of this funding,' she said.

'However, we are working closely with both colleagues at County Hall and potential private investors to make sure our new school goes ahead.'

The failed bid is the second blow for the school, which was scheduled for a re-build on a new site under the previous government's Building Schools for the Future (BSF) programme.

Hopes of this relocation were dashed when the new administration cancelled the scheme in 2010.

The school has been working with local social entrepreneur Robert Ashton to find alternative ways to replace the cramped, outdated school.

Staff and pupils at the 50-year-old campus have been given outstanding reports from Ofsted inspectors, despite struggling with little space for pupils' specialist equipment, which means some have to be transported to other schools to ensure they receive the required curriculum.

Mr Ashton said the new school would cost �10m and be able to accommodate up to 110 pupils, 48 more than the current campus.

Sufficient equipment would be provided on site so students no longer had to be transported to other schools.

He added suitable land for the development was still being looked at in the Wymondham and Attleborough area, but said he was not too despondent about the failed bid as the amount would just have been a third of the money needed.