Plans to build more than a thousand homes are at risk despite a council being awarded millions of pounds to fix potential flooding.

Maldon District Council was handed a £7.3 million cash pot by central Government to help protect 1,500 homes.

The scheme is due to be completed as part of the North Heybridge Garden Suburb project which will see 1,100 new homes built.

Permission had been given to build the homes subject to certain critical conditions.

A council report, released last week, revealed one of the major conditions may not be fulfilled as the Environment Agency has not yet agreed to take on the flooding scheme, despite the grant being awarded.

If the flooding scheme is not adopted planning permission would effectively be revoked as the conditions for permission would not have been met.

A report, due to be heard by the full council tonight, states: “This was on the understanding that Countryside [the developers] would fund the capital costs and the Environment Agency would own, manage and maintain the flood alleviation scheme.

“Work on that agreement progressed but was halted when the Environment Agency informed the council they were not going to adopt the ownership of the FAS.”

The Environment Agency took the decision after it was found the “benefit to cost ratio was low”.

The report added ownership of the flood scheme needed to be “resolved to enable the scheme to proceed”.

Discussions are ongoing with the Environment Agency to come to an agreement.

The report added: “In the event that agreement cannot be reached, the council will need to consider whether to it is prepared to accept the developer proceeding with an alternative scheme.”

A spokesman for the Environment Agency said: “We have been working with Maldon District Council and the developer Countryside over the last few years. The council commissioned a report in order to receive Government funds towards the scheme.

“The draft report showed a benefit cost ratio of less than one and unfortunately Treasury rules require projects to have a benefit cost ratio greater than one in order for us to contribute towards the project.

“However, following our advice the draft report has been reviewed and the benefit cost ratio now appears to be greater than one. If this is the case and a final report published, the council can use it to seek a Government contribution to the scheme.

“We welcome the news of the successful bid and are looking forward to working with the council to see how best the funds can be allocated to alleviate flooding in the area.”

Due to the cost of sorting out flooding problems the developer had only been asked to provide 15.5 per cent affordable housing instead of the normal 40 per cent.