Norfolk county councillors and chief officers have been sent a warning setting out the consequences of leaking information following disclosures about a proposed incinerator near King's Lynn.

On Friday, the EDP revealed that County Hall could face a compensation bill of up to �20m if controversial proposals for a waste incinerator at Saddlebow, near King's Lynn did not go ahead should planners fail to give the decision the green light.

The county council's cabinet is today expected to rubberstamp a decision to select Anglo-US firm Cory Wheelabrator as its preferred bidder to build the �169m project, which is capable of treating 170,000 tonnes of black bin waste and a further 90,000 tonnes of commercial waste.

But the authority is facing calls to go back to the drawing board amid fears that county councillors could effectively be held to ransom on the planning issue knowing that a 'no' vote could leave the authority with a massive bill.

On Friday, Victoria McNeill the council's head of law, emailed councillors and chief officers with a warning about leaking confidential information under the code of conduct for councillors and for officers under the standards of conduct and behaviour policy.

'Both the code (section 4) and policy (section 11) require you not to disclose information of a confidential nature,' she added. 'Breach of the code may result in a standards investigation and breach of the policy may result in disciplinary action.

'Where disclosure of confidential information results in an action for breach of confidence it may result in an award of damages,' she said. 'I'm sorry to have to direct this to so many of you who scrupulously abide by the rules, but it is important that everyone who receives confidential information recognises their obligations and the sanctions, where under the code, the policy or in the courts, for breaching these obligations.'

Following the leak, Joel Hull, the council's project director for residual waste services, said it was conventional for the public sector to pay compensation if a contractor has used all reasonable endeavours but failed to get planning permission.

But the amount of compensation has raised eyebrows among some, while other councillors are concerned that the public had been kept in the dark about the practice. There is also a fear that the firm may now issue a legal challenge against the authority following the disclosure.

Lib Dem councillor Tim East, who has led the campaign against incinerators, said: 'My own view is that this sort of thing should be in the public domain. There's no commercial sensitivity about a compensation deal, especially as Joel Hull says this is conventional practice and happens in all applications. If it happens in all applications of this magnitude why shouldn't it be out in the open?'

Labour councillor George Nobbs said: 'This is clearly the action of a very rattled council. It deserves to be out in the open.'

However, Green councillor Andrew Boswell condemned the leak as 'inappropriate' and said it distracted from more important concerns about the project such as the failure to demonstrate that it would guarantee yearly reductions in carbon emissions. Conservative councillor Brian Long said he did not believe the revelations would damage the bid. 'With large contracts of this type there's always likely to be clauses of this type because the person developing the scheme will have spent an awful lot of money to bring it to fruition,' he said.