Planning inspector Stephen Amos hit the authority with the hammer blow in his report following a public inquiry into the council's compulsory purchase order for the former flour mill site.

The council and its development partner, CDP, of Elland, wanted to build retail units, a repacement swimming pool and extra car parking spaces.

But the report said: "The inspector does not consider there is any reasonable prospect of the development scheme proceeding.

"In the circumstances, where so much uncertainty exists, he is not persuaded the public interest would outweigh the private losses that would result from the order."

His view was endorsed by Hazel Blears, Secretary of State for Local Government, who refused to confirm the compulsory purchase order for the site at Mill Royd Street, Briggate and Bridge Road.

A development brief was approved by Calderdale Council in February 1998 but then followed a series of delays and court hearings.

Major landowner Younger Homes (Northern) Ltd, of Brighouse, has repeatedly objected to the council's plan, which has outline planning permission for what it believes is a more appropriate mixed-use development.

Managing director Bill Ibberson estimated the legal wrangling had caused both parties a total exceeding £1 million.

He told the Courier he now wanted the council's chief executive Owen Williams to contact him and take his proposals further. They include a health centre, sheltered housing, apartments, hotel swimming pool and road improvements.

Mr Ibberson said the decision was a huge embarrassment for the council.

"We now have to reflect and I'm hoping the chief executive will ring and we can move forward together," he said.

"I am anxious to move forward. The town has been without a swimming pool long enough.

"We feel vindicated and pleased with the result."

Mr Ibberson said a key factor was the fact that the council and CDP had had the opportunity to buy the site he now owned

"When we said we would buy it, Associated British Foods offered it to the council and they did not want it and that can't be the basis for a CPO."

Calderdale Council last night gave a short response to the ruling and did not elaborate on future options.

"Naturally, I am disappointed with the decision of the Secretary of State to accept the recommendation of the planning inspector not to confirm the order," said council leader Ann McAllister.

"An integral part of the proposed development for the site was a new swimming pool.

"I would like to assure the people of Brighouse that I am committed to providing them with a pool at the earliest opportunity."