TALKS are continuing in a bid to reach agreement over the future use of a former brewery site in a prime city centre location.

But site owner Tesco has been warned that compulsory purchase measures may be adopted if it pursues plans to develop a £50m superstore on the now-derelict Vaux Breweries, in Sunderland, almost four years after its closure.

Alternatives proposals, for mixed housing, business and leisure use, have been put forward by Sunderland Area Regeneration Company (Arc) in an £280m project.

Offers of alternative sites made by Arc officials have been turned down by Tesco, which sees the land as ideal for a flagship store "on stilts", over a large covered car park.

Tesco says its plans, which include a business and residential element, would fit in with the overall regeneration of the city centre.

Negotiations are said to be on-going between Arc and Tesco, but the regeneration company's final option could be a compulsory purchase of the site.

Operations director Jonathan Bretherton said purchase order powers would be a last resort.

"We are still aiming to achieve a settlement with Tesco through negotiations," he said.

Both of the parties' plans are being considered by officials at the city council, but the final decision on the redevelopment would rest with the office of the Deputy Prime Minister, John Prescott.