CONTROVERSIAL plans for the derelict Arcade site in Walthamstow have been “an illusion” for months, the council has admitted.

The site has been empty for nine years but earlier this year a controversial scheme was unveiled to build an 18-storey tower block, a multiplex cinema and a shopping centre by the end of next year.

However, the collapse of the housing market and a reported 69 per cent drop in developers St Modwen share price led to claims the scheme was no longer workable.

After months of insisting the scheme would go ahead “as originally envisaged”, Cllr Terry Wheeler, cabinet member for regeneration, was forced to admit the plans will now have to go back to the drawing board.

A leisure centre may now form the centrepiece of the new scheme.

At a meeting of full council last week, The Conservative group demanded to know how plans were progressing in the light of St Modwen’s “serious financial difficulties”.

As well as admitting the plans have been “an illusion” since the summer, Cllr Wheeler said there will have to be a wait of three to five years before retail can be introduced.

The site on the corner of Hoe Street and High Street, was described as a “blot”, a “carbuncle” and even compared to the Titanic by councillors from all three political parties.

Cllr Alan Siggers, who introduced the Tory motion, said: "We had a retail site in the arcade. It might not have been the best one in the world, but at least it was there. Now it does nothing apart from make us look foolish."

Cllr Wheeler responded: "We have to be very flexible in taking this project forward. Let's try and make the best of it.”

The empty site in a high profile part of Walthamstow town centre has been a long-running source of frustration for residents.

Previous schemes have failed and the future of the adjacent EMD cinema has remained unresolved.

Angry councillors said the site should have been sold off when the housing market was bouyant and many blamed Cllr Wheeler’s predecessor Simon Wright.

St Modwen’s development director, Nick Kay, admitted the current economic climate was making life difficult for developers, but said St Modwen was in a much stronger position than most.

“We are still very much on board with the regeneration of the arcade site. As a result, we will continue to evolve the scheme with our partners, Waltham Forest Council, which we hope might include a leisure centre that would be similar to one we have just completed at Edmonton Green and which was well received by the local community.”