THE recession has shattered hopes for a £1bn redevelopment programme that could have created up to 9,000 jobs.

The hunt for a developer to take on the much-hyped York Central project has been suspended because of "market conditions."

The project had been expected to see 3,000 homes, a new road and bridge, shops, restaurants and a long-awaited bus station on a teardrop-shaped area of land behind York Station.

But according to landowners Network Rail, Yorkshire Forward and the National Railway Museum market conditions have made it impossible to secure a commercially viable deal.

Network Rail’s head of major developments, Ian Lindsay, said two "very accomplished" bids had been received for the redevelopment.

"However, as everyone knows, the property market is very challenging at present," he said.

"York Central was always going to be a complex development even when the market was strong. Disappointingly, in the current property market, it has proved impossible."

York’s acting chief executive, Bill Woolley, said: "Clearly the exceptional financial conditions that currently exist have frustrated the procurement of a development partner at present.

"However, we will continue to work with Yorkshire Forward and the two landowners on plans for this regionally important site."

York’s Lib-Dem council leader, Andrew Waller, said it was important to chase long-term success, despite the recession.

He said: "This is not just an economic driver for York, but the wider region, and as such I will be lobbying for support.

"While the recession is having a negative impact on many developments around the country, this should not deter us from seizing the opportunity in the long run, and much can be done to help make the area more attractive for developers once the national economic situation improves."