A reduced number of homes will be built on a stalled Norfolk housing development, which had hit the buffers after lenders refused to provide mortgages for the new houses.

Developer C-Zero has submitted plans to build 102 homes at Long Meadow, between Roydon and Diss, to South Norfolk Council, a reduction from the original 114 properties which were planned as part of the Discounted Market Sale agreement with the council, whereby the homes would have been sold at less than market value.

Fears have also been raised schools in Diss and Roydon will not receive the �800,000 originally earmarked for community infrastructure projects because the size of the development has been reduced.

Last week, South Norfolk councillor David Goldson, who is a governor of Roydon Primary School, said the school was planning to use the money to provide a new mobile classroom to cope with the influx of children from the new estate.

But C-Zero director Robert Pearson said under the revised plans future profits would be clawed back to the benefit of the council.

He added: 'The total contributions payable for local services are actually greater than would be required for this development under the new Community Infrastructure Levy.'

Three different ways of providing affordable homes have been proposed as an alternative to the Discounted Market Sale arrangement, including affordable rent, with at least a 20pc discount to the local market, shared ownership, and equity loan, under which the developer provides an interest free loan to the buyer.

The developer has also written to anyone who had reserved a home under the original 114 house scheme to offer them first refusal on the new homes.

C-Zero is banking on receiving funding from the government's Get Britain Building Fund after the site was listed among 224 building projects chosen to receive cash from a �570m pot to help re-start building work on stalled homes developments.