TESCO has received another setback in its bid to gain a foothold in a North-East town.

The supermarket group is linked to a plan for a small shop in Darlington, despite the recent rejection of a huge scheme that would have transformed a quarter of the town centre.

Last night, it emerged that although the latest planning application for a shop conversion had been submitted and rejected by Darlington Borough Council, the council was not aware of Tesco's link to the site.

And while it has declined to comment, the Land Registry lists Tesco as the beneficiary of the former Shell petrol station in Darlington's North Road.

Tesco does not own the land and did not submit the planning application.

The Land Registry document shows the site is owned by Refined Petroleum Limited and that the company that submitted the planning application - Manhattan Corporation Limited - has had an agreement with Tesco since December last year.

A plan to build a huge Tesco, 130 apartments and a new town hall in Darlington town centre, was overwhelmingly rejected by councillors last month after public consultation.

There were fears a large Tesco would put small traders out of business.

The North Road plan was for a much smaller shop. None of the companies involved would confirm whether an application would be re-submitted.

Tesco said that it had worked with Manhattan Corporation Limited in the past.

Alan Coultas, who was part of the Say No to Tesco in Darlington campaign, said: "My view is that this is sneaky tactics. It illustrates that we have to watch this company very carefully.

"We are left with the feeling that one way or another, Tesco wants to get into Darlington."

Mike Barker, who was also part of the Say No to Tesco campaign, said: "This is symptomatic of the way Tesco does business.

"There are a lot of small independent traders in that area already and they would be threatened and possibly put out of business by a Tesco."

A council spokesman said: "We received the planning application and it was considered on its merits, like any other.

"There was no mention of any specific supermarket operator that would have been based on the site they were proposing."