A key city centre site is once again up for grabs after the dramatic collapse of a long-standing deal to redevelop the former Odeon.

But both the owner of the Prince’s Way building, the Government’s Homes and Communities Agency, and the leader of Bradford Council, warned yesterday that any new scheme must be “commercially viable” for it to progress.

It follows the announcement from the HCA, which inherited the building a year ago this week, that it had terminated a legal agreement with developer Langtree, spelling the end of the £40 million New Victoria Place development.

The company had wanted to demolish the 1930s building to create offices, a hotel and apartments.

The HCA has ruled Langtree has failed to comply with the terms of the development agreement after it called for more time to market the scheme to potential occupants.

David Curtis, HCA executive director for the North East, Yorkshire and The Humber, confirmed it would offer the building to the Council, but Government approval would be needed before any transfer could take place.

He also said that “all options were open” – restoration, partial retention or demolition and redevelopment – and that he expected the building’s future to be determined within 12 months.

Council leader, Councillor David Green , said, however, that given the current financial situation and funding cuts to the Council, the authority had no money to buy the building from the HCA, but it was originally bought with public money and he would discuss its transfer with the HCA.

It comes three months after the HCA first signed a vital Section 106 agreement, which Langtree was expected to add its signature to before passing the document to the Council to seal. This would have given valid planning permission for the development as well as conservation area consent to demolish the building, including its iconic twin towers.

But the sticking point appears to have been Langtree’s reluctance to trigger an eight-month period in the development agreement in which it would have to prove it had a viable scheme in place as well as tenants and the finances before it could proceed to demolition.

Langtree responded yesterday saying it had been put in an impossible situation. Its chief executive John Downes, said the development agreement signed in 2007 imposed additional obligations that, given the current market, were not practical.

The news of the building’s reprieve – however temporary – has been welcomed by those campaigning to save it who say it gives renewed hope that it can be permanently saved.

Norman Littlewood, chairman of Bradford Odeon Rescue Group, which has been campaigning for almost a decade, said: “It’s very good news and we feel that it is down to the very hard work of all BORG members and supporting Bradfordians. It just shows the strength of people power.

“It’s probably one of the longest campaigns in history and is to be welcomed that in our tenth year of campaigning we should see this reprieve.”

The group added that it was looking forward to working alongside the HCA to ensure that all representations that look to refurbish the existing Odeon building are given full and proper consideration.

Mr Curtis said: “Since assuming ownership for the building a year ago, we’ve been working hard to look after the building, remove potentially fatal asbestos and resolve the complex legal issues surrounding the plans for its future.

“We know the Bradford public has been frustrated at the uncertainty surrounding the building – and we’ve been frustrated too.

“When it was clear that the developer wasn’t prepared to meet the obligation to commence with the New Victoria scheme we decided to terminate the agreement.

“We haven’t taken this decision lightly and it won’t be a simple task to resolve the building’s future. But we’re determined to secure a viable outcome for the site and we’ll work with the Council and local community to find a solution that meets their ambitions for the city centre.”

He added that Langtree wanted to extend the eight month period, but that the HCA was not prepared to agree to this as it would change the terms of the original development agreement it inherited when it took over the building from Yorkshire Forward.

In that time Mr Curtis confirmed it had spent more than £1 million on the building, making it safe and removing asbestos.

Coun Green said he was “delighted” the situation could now lead all or part of the 1930s building being saved.

“I am pleased that we have closed this particular chapter on the Odeon which gives us the opportunity to rethink the future of the building,” he said.

“We will be speaking to the Homes and Communities Agency about all the issues relating to the Odeon, including future ownership.

“What I hope it will agree to is that we can now go out to all those groups and individuals who have indicated that they have viable and sustainable alternative plans for the building to ask them to bring forward their business cases so they can be reviewed and we can assess whether any can be progressed.

“I would hope to be meeting the HCA in the near future and to be able to come to an agreement along these lines so that those individuals and organisations with alternative plans will know the timescale in which they have to prepare their business cases. I would hope that one or more of these schemes can be taken forward to the next stage.

“I have consistently stated the view of the Labour group that we would want to see all or as much of the building as possible being retained in a viable and sustainable scheme and this now gives the opportunity for this.”