A £80m building project that was set to create 650 new jobs in Southampton has stalled after a row over cash broke out between the developers and city council, the Daily Echo can reveal.

There are now doubts over when Mayflower Point – described as the most striking building ever proposed for Southampton – will get off the ground. It is the latest body blow to a £1.5 billion dream for Southampton that would have transformed the city.

Just 12 months ago, the city was thought to be entering a “golden age” of redevelopment.

Some 14 major developments were due to rise into the sky by 2012, but the future of at least five city centre developments is in jeopardy after they hit financial difficulties in recent months.

Fly-by model of how the city should look

Construction of Mayflower Point – proposed to rise up on a site left derelict for 20 years – was due to start in the summer after the council gave planning consent. Touted as Southampton’s flagship business development, the project includes a plush eight-storey office block, a 14-storey apartment tower and a 150-bed hotel alongside The Mayflower theatre.

The Daily Echo has learned the project has since stalled after developer Terrace Hill – which bought the site for £7.4m last year – became locked in a stalemate with the council.

Six months after getting the go-ahead to the build, negotiations are still ongoing over how much money Terrace Hill will have to contribute to the city under planning arrangements.

Terrace Hill yesterday confirmed building work had been delayed and that a brick would not be laid in 2008.

“Negotiations with the council over Section 106 funding are still ongoing and as soon as they are completed we can look at starting construction,” the firm’s spokesman said. “We are hopeful of starting work on the site in March 2009.”

The V-shaped site – bounded by Havelock Road, Commercial Road and West Park Road – has stood empty since the 1980s, having failed to progress under former owner Clerical Medical Investment Group.

It is hoped the high-profile development – which lies between the Civic Centre and Mayflower Theatre – would encourage other potential investors to regenerate the city centre’s ageing offices.

Southampton City Council last night refused to reveal how much cash it was demanding Terrace Hill pump into council coffers.

A spokesman said: “We are in dialogue with Terrace Hill and due to the ongoing confidential negotiations we are confident that we can make progress.”

Terrace Hill is still confident it can attract major prestige firms. The spokesman said advanced talks were ongoing with several businesses.