A CONTROVERSIAL plan to build flats on an under-used council car park has been shelved.

Blackmore Building Services (BBS) have withdrawn from the scheme to build 60 flats, a doctors surgery and medical centre on Highams Park station car park, in Larkshall Road.

The affordable flats were commissioned by the Shoreditch Housing Association and NHS Waltham Forest (PCT) had planned to occupy the other facilities.

The difficult economic conditions appear to have to scuppered the plan, although BBS have refused to explain their withdrawal.

The Guardian understands the PCT are in negotiations to occupy part of the Tesco development planned for Highams Park.

The number of drivers using the car park has fallen dramatically since the council hiked charges by 150 per cent, prompting accusations that the increase was designed to smooth the way for a sell-off.

Residents complained that drivers began parking in nearby streets and many were concerned about the situation would be compounded by the new development.

Some were also concerned about a potential loss of privacy and there were fears about a 700-year-old hedgerow and protected species of beetles and song thrushes.

They now face an anxious wait to see if a new application is submitted.

Malcolm Shykles, 68, of nearby Coolgardie Avenue, said: "We are not celebrating because the developer could resubmit its plans. As the current fall in housing prices makes the affordable home as expensive as a decent home there is probably no point in building them at this time."

He added: "Following the car parking increases instead of 120 cars parking in the car park each day only eight or 15 parked there. The loss to the council is something like £62,000 a year so it has lost around £120,000 so far."

The council said it made £21,000 a year from the car park, excluding maintenance costs and management costs, in a report discussed by the authority's cabinet last July.

A council spokesman said: "There are no plans to move parking charges this financial year. The council currently owns this car park but the cabinet agreed in principal to sell the land to Islington and Shoreditch Housing Association."

A Tesco application to build a 24-hour superstore, 260 homes, shops, an underground car park and other amenities has been submitted to the council.

It is not known when a decision on the application will be taken.