Teesside Airport has sounded the death knell for an ill-fated multi-million pound freight terminal development.

The South Side project, turning the airport into one of the biggest cargo handling centres in Europe, was heralded by development agency One NorthEast as a corner piece of its regional strategy.

But it was scaled down last year after bosses admitted it was too ambitious.

But the airport, near Darlington, confirmed yesterday that it had parted company with London developers Moorfield, which put forward the original proposals.

Airport managing director Hugh Lang said the decision was in the interests of both.

He said last year that Teesside was placing too much emphasis on freight.

But in a thinly-veiled attack, Mark Gilbard, managing director of Moorfield, said its involvement in the South Side development had been an "exercise in frustration".

He said: "We spent five years working on this and a great deal of money, and an opportunity remains for such a project that receives the necessary support.

"We wish the management well at the airport and there is no ill-will between us.

"But there have been a great many frustrations as a result of indecision from people in authority."

The freight terminal was given the go-ahead by Deputy Prime Minister John Prescott in 1999.

But agreement on terms and conditions - in effect, setting out a blueprint for the development - was never reached between the airport and Moorfield, despite lengthy discussions.

Work was due to begin two years ago on marketing the terminal, which was to include 1.8m sq ft of factories, warehouses and offices.

In a change of direction, Teesside Airport has since announced an agreement with One NorthEast, making £6m available for new infrastructure projects aimed at improving road and rail access for passengers.

Roger Tym and Company, of Manchester, has been brought in as consultants to produce a blueprint for the airport.

The airport is hoping to increase passenger numbers from 750,000 a year to up to two million by the year 2010.

Airport boss Mr Lang said: "We expect in the near future to be in a position to make significant announcements aimed at improving facilities for customers and attracting further increased business.

"The air travel business is rapidly changing and I have made it clear that the proposals drawn up some years ago in relation to the south side of the airport were at odds with market conditions.