Plans to build a new city academy on the site of a failing school could be dropped because it is too close to a large chemical works.

The Telegraph & Argus can reveal the Government wants to close Wyke Manor School in Bradford and replace it with a privately-sponsored, independent city academy.

However, it might decide to build the school on a new site because the school grounds in Wilson Road, Wyke, are next to AH Marks, in Wyke Lane, which makes products for the petrochemical industry.

Sir Bruce Liddington, the head of the Dfes new projects unit, said a sponsor had been found to provide the £2 million backing for a new city academy to replace the school.

But he said the Government needed to explore the "environmental issues" surrounding Wyke Manor before deciding on a potential site.

If Wyke Manor became a city academy it would be re-launched with a new name in a new building.

However, this is unlikely to happen before 2008 as the school has yet to submit an expression of interest, the first stage of the process.

Sir Bruce said: "When we are opening an academy, we look for three things - finding a sponsor, identifying a school which is not achieving the level of performance required, and identifying a site.

"At Wyke we have two of those and the logical solution would be to build a new school on the site but we have to carry out an assessment to take into account the environmental issues at the Wyke site."

Sir Bruce said assessments were always carried out when the Dfes was planning to build new schools.

No-one at Wyke Manor was available to comment. AH Marks was also unavailable to comment.

Bradford Council's director of education Phil Green said: "Any speculation on future academies would not be fruitful."

Residents living near the school said they had no concerns about the plant. Robert Taylor, has lived in the area for 30 years. He said: "Whenever there is an easterly wind the smell can be quite pungent. However the company notifies people in the area if there is going to be any chemicals released and none of my children or grandchildren have ever had any health problems from the it."

Matthew Stephens, a former pupil of Wyke Manor, said: "They let you know well in advance if there is going to be anything released and it doesn't bother me. The plant brings a lot of jobs and money into the area."

Another resident, Russell Morgan, who has two children at the school, said: "I think that the traffic in the area is a more pressing concern for parents."

There are now five schools in Bradford which have been identified as part of the Government's city academy programme. Dixon's City Academy in West Bowling became the first in Bradford when it transferred from city technology college status at the start of this term. Bradford Cathedral Community College in East Bowling has had its bid to be an academy approved by the Government.

At a hearing into the future of city academies held in Bradford three weeks ago, Mr Green revealed that Carlton Bolling College in Undercliffe and Rhodesway School in Allerton had submitted expressions of interest.

The T&A also revealed last month that the Government has held talks with Muslim community groups in the city about the possibility of them sponsoring a city academy in Bradford. Sir Bruce said creating a Muslim City academy was in line with the Government's plan to open more faith schools.

But he said that no school had yet been identified as a potential city academy for Muslim sponsors.

Sir Bruce: "When educating Muslim children you have to take into account that their religion is hugely important to them and their families. It would probably not be appropriate to have a traditional voluntary-aided Roman Catholic sponsor serving an academy which is attended by a majority of Muslim pupils."