A scheme that would have brought hundreds of jobs to Norfolk has been scrapped after an aviation firm withdrew its bid to transform RAF Coltishall into a high tech airliner scrapyard.

An advanced proposal to bring a high tech aircraft decommissioning business to the old airbase looked set to secure a viable future for the much loved and historic 650-acre Battle of Britain site.

The TAG Aviation plan was widely viewed as a hugely positive economic and jobs outcome for the former site, bringing with it relatively few problems and only one flight per day on average.

The news that TAG Aviation has pulled out of a deal to buy the historic base has been deemed a 'major blow' as the north Norfolk district currently has an estimated 2,800 unemployed.

The Stansted-based firm was announced earlier this year as the successful bidder for the 650-acre site and proposed to turn it into a recycling centre for ageing jets and recondition stripped parts, creating more than 300 full time jobs for a mix of skilled and semi-skilled workers.

But in a 'disappointing' move the company has withdrawn from the purchase with the Ministry of Justice, which owns the former Battle of Britain base, citing changes to the funding of the project.

Andy Verdon, who worked for TAG as a consultant for the Coltishall plans, said the company was 'disappointed' to have to pull out.

'The nature of the financial backing against which the original business plan was drawn up changed, and with (the) new financial situation the company was unable to make the business work and had to withdraw with great regret,' he added.

Kate Wiseman, a recruitment consultant with HR GO plc in North Walsham, said the hardest hit by the announcement would be job seekers who could not risk temporary employment.

'A company like that coming in saying 'yes we have got jobs to offer' is a godsend,' she added. 'For people who were holding out for them it would be quite a major blow.

'There's always a demand for temporary labour but it's not easy for people with family commitments to take that kind of work. It (TAG's plans) certainly gave some real optimism.'

Conservative councillor Trevor Ivory, district member for Scottow Ward which includes a large part of the site, said the announcement was a 'set back' after his party swept to power in May and pledged to attract more employees to the area and create jobs.

He added: 'We really have prioritised Coltishall and tried to secure it, it's absolutely critical it has a job creating future.

'The priority now has got to be to work closely with the MoJ to see what the alternatives are.'

An estimated 420 civilians lost their jobs and more than 1,200 service personnel were relocated when Coltishall closed in 2006, marking the end of its illustrious 68-year history and making a �21m dent to the local economy.

The base, which played a key role in the defence of the country during the second world war and was home to Jaguar jets used in the Gulf war and conflicts in the Balkans and Iraq, was taken over by the MoJ and became home to HMP Bure, a category C prison, in 2009.

TAG's withdrawal has left a question mark hanging over the site as the MoJ is now in talks with one of the previous bidders, which lost out to the aviation firm.

North Norfolk MP Norman Lamb described the announcement as 'very bad news' after receiving a letter from justice minister Crispin Blunt over the weekend informing him of the move.

In the letter Mr Blunt said: 'It is too early to confirm specific details but we are aiming to ensure, as far as is possible, that the intended benefits of the previous bid are realised in this one.'

Mr Lamb welcomed this as he thought it was 'critical' any future plans were similar to those of TAG's and included employment opportunities and re-used the site.

Previous bidders remained secret even after the EDP submitted a Freedom of Information request to the MoJ, but would-be buyers - WCD Aviation Group and Aylsham Growers, along with TAG - did declare their interest publicly.

Glyn Williams, chairman of Coltishall Eco Town Action Group (CETAG), set up initially to oppose previous plans to build environmentally friendly homes on the site, hoped residents would be consulted.

He added: 'It's a disappointment the TAG scheme has fallen by the wayside, it appeared to offer an almost ideal package of benefits for the area.

'But there were several bids on the table and I hope the MoJ can move quickly to identify a replacement.'