The Axminster Masterplan for up to 850 new homes and a long-awaited relief road hangs in the balance.

East Devon District Council's Strategic Planning Committee last week agreed it was not possible to progress the current scheme for the town's North East Urban Extension after Homes England's Housing Infrastructure Funding (HIF) of £10m was turned from a grant to a loan.

It would have been used to forward-fund the new £16.7m north-south bypass designed to end the severe congestion, pollution and HGVs travelling through the centre of the town.

But a row over land values has led to Homes England assessing that they believe the money can be repaid, and as a result, officers said there is no credible way of proceeding with the HIF bid since the monies cannot be secured as traditional grant funding and the development cannot afford to make the required repayments.

Councillors agreed that it is not going to be possible to progress with the HIF bid as things stand and that the offer is likely to be withdrawn unless Homes England changes its position on land values.

But they also agreed to re-engage the consultants for the Axminster Masterplan to review options to enable the forward delivery of the relief road in its entirety and that a Housing Delivery Action Plan be produced to consider how to bolster the housing land supply position in the district.

Axminster ward member Cllr Andrew Moulding, said: "The traffic is getting worse and worse, and the relief road is vital for the future of the town. For it to come first would be best and, importantly, will support 800 new jobs for the area, and the growth will enable schools to flourish and provision of health and wellbeing needs.

"My position has always been that the development must be accompanied by the upfront delivery of the relief road."

Fellow ward member, Cllr Ian Hall, added: "If the Masterplan isn't deliverable without the forward funding for the relief road, then it needs to be stuck on the shelf until the funding is available.

"I will not stand idly by and watch this go through without the forward delivery of the road that will unlock Axminster."

Axminster councillor Sarah Jackson added: "The officer recommendations to push ahead with piecemeal development is not acceptable and neither are the proposals to reduce other benefits such as the provision of employment space and delivery of much needed affordable homes.

"Forward delivery of the road must remain the primary focus of the entire Masterplan. This is not the end of the story but it does take us all towards securing a deal which works for Axminster in its entirety."