MULTI-MILLION-POUND plans to regenerate a town centre were dealt a blow yesterday after the government rejected bids for funding.

The Gateway project for Billingham, Teesside, is a proposed leisure, learning, health and cultural facility in the town's John Whitehead Park, which will cost more than £20m.

Bids for £17m of private finance initiative money had been made to the Office of the Deputy Prime Minister and the Department for Culture, Media and Sport.

But they were rejected and Stockton Borough Council has said it will continue to look at other ways of raising the money for the project.

Kevin McAuley, the council's head of leisure services, said: "While we are obviously disappointed at the news, this was just one of the options available to us and we still have other avenues to explore."

The cash would have allowed private sector money to be ploughed into the provision of the Gateway scheme with public sector money being paid over a period of about 25 years for the use of the facilities.

The council plans to use the capital receipt from the sale of the Billingham Forum site to provide funding for the project.

It also has a Single Programme allocation of £5m, the majority of which is subject to a future application.

Last week, the council's cabinet agreed to proceed with the development of the Gateway project following a consultation exercise held with residents in Billingham.

Kevin Pitt, chairman of the Billingham Partnership Board, said: "I'm confident the Gateway will eventually become as cherished a landmark as the now ageing Billingham Forum was in its heyday. The boost this facility will give to the town centre will generate many new jobs and help ensure that Billingham remains a place where our young people will want to stay."

Steve Cooke, manager of the Billingham Partnership, said other avenues of funding were now being explored.

The Office of the Deputy Prime Minister said it had received 38 bids from across the country and it was able to approve 20 per cent of those.

Details of the proposals are available on the partnership website which can be found at www.billinghampartnership.org.u