Council chiefs may have to pause work on a controversial new bypass and homes scheme for Chippenham.

Wiltshire Council is relying on millions of pounds of funding from the government agency Homes England for its Future Chippenham project.

It had an agreement for funding – known as a grant determination agreement – with Homes England while the council was consulting local people over which route a hotly-debated southern bypass should take.

Last July, the council opted for one particular route and started the process of renegotiating the agreement.

A report drawn up for a council cabinet meeting earlier this month said that ‘despite ongoing discussions’ with the agency over the course of a year, no agreement had yet been reached.

At the heart of the need for a new agreement is the fact that the route chosen by the council would push its cost over the £75 million in the first agreement.

The report says that the council will now have to stop work on the project – and possibly withdraw from an agreement altogether – if it cannot negotiate a new deal.

It had set itself the deadline of the end of this month (JULY), and has taken expert legal advice on the implications of it walking away from the current agreement.

It has continued to work on the project while talks with Homes England have gone on, but is now worried that continuing to do so would put it at unacceptable financial risk.

The council has so far spent nearly £12 million on the project, with more than £6 million of this coming from Homes England.

It is not clear whether the council would have to pay this money back if it failed to reach a new agreement.

The new road would be part of a huge project to unlock the development potential of land around the southern edge of the growing town.

More than 4,000 new homes are being envisaged, with the redrawing of a new settlement boundary for Chippenham.

The council has so far survived a High Court challenge to its scheme, but faces opposition from campaigners opposed to the loss of countryside for the road.

Helen Stride of the Campaign Against Urban Sprawl in Southern Chippenham group, which mounted the court challenge, said she hoped Homes England would decide not to keep funding the project.

“We think it’s shocking that the council has spent so much money so far on something that people simply do not want. Eighty per cent of people in the consultation did not want a new road.”

Council leader Richard Clewer said: “Following the cabinet decision on 12 July, the council is continuing discussions with Homes England in the context of the original grant determination agreement for funding and the council’s stated Future Chippenham programme aspiration. The outcome of those discussions will determine the future of the programme subject to the local plan review.”