WORK has ground to a halt on a multi-million pound, flagship town centre redevelopment.

Contractors have ordered their staff off the site at Teesside House, central Middlesbrough.

Trenches for building-foundations have been back filled, one site cabin has been removed and others will be loaded back on to lorries on Monday - the day pile driving was to have started.

Middlesbrough Council has approved plans for a restaurant and shop on the ground floor of the long derelict ten-storey Teesside House, with the floors above converted into 215 student flats, spreading out over the two adjoining car parks, and topped by six luxury penthouses.

Ray Mallon, Mayor of Middlesbrough, had welcomed news of the £12m town centre investment which he said would turn a town centre eyesore into a tremendous asset for Middlesbrough.

But six weeks into work starting on site, it has stopped. While there are denials of cash flow problems and fall outs, no-one can say when work will resume or what form it will take.

The project was commissioned by Carlisle Property Development through its Middlesbrough-based off-shoot, Campus Lifestyle, which bought Teesside House and nearby York House and the largely disused car parks associated with both buildings.

Campus Lifestyle said yesterday it was in "advanced discussions" with the Mandale Group to form a joint venture on a number of student-based development schemes across the region.

A statement said: "In light of these discussions, Campus are reviewing their plans for these two buildings and have put the commencement of building works on hold, as it may form part of the ongoing discussions between the two Teesside based companies.''

A Miller Construction (UK) Limited spokesman said: "I can confirm that there has been a delay in the start of this project. Miller Construction remains committed to the construction of Teesside House and is working with Campus Lifestyle and their partners to ensure the success of this development. We look forward to a start on site in the near future."