A new deal to lessen the risk to taxpayers of the Arcade site development has been agreed.

Waltham Forest Council stepped in when it emerged developer Islington and Shoreditch Housing Association (ISHA) was struggling to find tenants for retail units which were supposed to generate enough revenue to cover the cost of the lease.

The authority offered to sell ISHA the freehold and take on most of the lease costs to prevent the development collapsing.

But the move was attacked by opposition Conservative councillors, who said selling the freehold would incur too much risk to the taxpayers.

And now the council's cabinet has bowed to pressure and agreed to retain the freehold on the site.

Tenants are still to be found for the retail units in the development on the corner of Hoe Street and High Street in Walthamstow, which would also include a cinema and 121 homes.

And the authority will still have to borrow large sums to cover the costs of the development, which is to be called The Scene at Cleveland Place, but has refused to reveal how much.

The Tory's estimate the council will need to borrow about £450,000 a year.

However, Conservative councillor John Moss welcomed the move.

He said: “We’re really happy they’ve taken our recommendations seriously and kept the freehold. The other option was too risky.

“The ideal situation would be if the developer paid for the site but we’re long past that.

It’s a much better way of doing it.

It takes away the risk of an increasing rent and it should be much cheaper. We’re not too worried that shops haven’t signed deals yet. That usually comes during the building process.”

Council leader Chris Robbins said: “Bringing a cinema back to Waltham Forest has taken a lot of hard work and time.

"Residents have told us that they would like a cinema in the borough and that is what we have set out to do.

"I can’t wait to see the construction work start in earnest, I think only then will residents truly believe that our ambitions for the site are becoming a reality.

"This development is the first of many and will be a catalyst for further regeneration.”

The site has been empty for a decade and has been the subject of a number of failed development deals.