Plans to turn part of the Leeds-Liverpool Canal into a major heritage attraction might have to be scaled down due to a reduction in available funding – partly due to the cost of the 2012 Olympics.

British Waterways was seeking grants totalling £300,000 to start a project to explain the huge importance of the canal during the industrial revolution.

The organisation received £35,000 from the WREN Landfill Communities Fund, which will be used to improve access around Bingley’s famous Five and Three Rise locks and attract further funding.

But Jo Keegan, regeneration project manager for British Waterways, said less funding had become available from the Heritage Lottery Fund since the initial plan was put together.

She said: “Since our first round application to the Heritage Lottery Fund last year, we have been advised by the HLF to make some adjustments to our proposals, and are working with them to redevelop our project.

“It is likely, given the challenging economic environment, we will need to look at the scale of the project.”

About £250,000 was to be spent on renovating the Three Rise lock cottage, a building which existed by the waterways from 1850 until the late 1950s.

It was hoped the building would operate as a heritage and interpretation centre to explain the role the canal played in the region’s rich history and be the start of a heritage trail along the canal towpath.

Mrs Keegan said: “The opportunities to get external funding have been reduced.

“A lot of the lottery funding has been diverted to the Olympics, so Heritage Lottery Fund has reduced its funding for heritage projects at the moment.

“The most important thing that’s happening at the moment is we are speaking to local stakeholders, whether that’s residents, businesses or community groups, to make sure we know exactly what local people want to enjoy from the site and how local businesses may benefit from improvements at the site.

“The most important thing we want to do is deliver some better information at the site of the heritage of the listed structures.”

A HLF spokesman said for the foreseeable future, it expects to make grants of £180m annually across the country, which is less than in previous years.

The spokesman said: “This is not only due to the impact of money going to the Olympics but also because we need to ensure we can meet commitments we have already made to projects.

“The reduction in our available funds due to the Olympics alone is £161.2 million which equates to about 7.8 per cent less money over this period.

“We have lessened the impact on the heritage in the shorter term by spreading that reduction over ten years.

“£180 million per year remains a huge investment into the UK’s heritage and HLF continues to be able to support applications of all kinds and sizes.”