A BID for £9 million of Government funding that would have helped kickstart work on the flagship York Central site has failed.

City of York Council and Network Rail applied to the Regional Growth Fund to speed up the development of the “teardrop” site, where progress has been stalled since 2009.

The money would have been used for demolition work and new access routes between the 37-hectare site, York Station and local roads, among other schemes. It would have helped to generate £57 million of private investment to complete the first phase of the project, the Queen Street Quarter, which would be predominantly office space.

Council leader James Alexander said he was “disappointed” with the decision and said the authority would now look at potential alternative funding. The Queen Street Quarter would cover 2.9 hectares including up to 40,000sqm of new and converted office accommodation, creating 268 jobs and 400 construction roles by March 2015 and a further 1,490 jobs by April 2018.

The credit crunch forced the search for a York Central developer to be called off four years ago. Coun Alexander said: “York Central is a key site in the city and one which offers rich potential for economic growth.

“However, I recognise the Regional Growth Fund criteria are such that this bid had an outside chance. I will continue to work with ministers and business leaders to unlock the potential of this site, as jobs and growth are our number one priority.”

A Network Rail spokesman said: "This announcement is clearly a disappointment to all the partners seeking to develop York Central, and we will continue to work with City of York Council to explore other opportunities to unlock this development site."

Coun Alexander welcomed the announcement that the fund would see Science City York manage the business grant programme for the York, North Yorkshire and East Riding Local Enterprise Partnership, saying it would offer funding opportunities for local firms and the council would be encouraging businesses to bid.