CRISIS talks are set to be held after a Government regeneration agency told council bosses they may not be able to hand over £13million promised for a scheme to revamp part of Blackburn town centre.

The North West Development Agency's bombshell comes just two months after it pledged the money in a bid to bring shoppers back to the town.

Projects such as the pedestrianisation of the Sudell Cross area to make it more appealing to pedestrians and new shops are now under threat.

Blackburn with Darwen Council has called the urgent meeting after new management at the NWDA -- which allocates Government cash for regeneration and business projects -- realised they had over-committed themselves by more than £200million.

At best, the council may now get a reduced amount this year, with more coming in smaller lumps in years to come.

At worst, the agency may pull the plug on its funding altogether.

Either scenario threatens the success of the project, which was expected to lever in around £40million of cash from other sources -- including the private sector.

According to publicity at the time of the cash announcement, at the end of January, up to 3,000 new jobs would have been created, 50 new businesses formed and 250,000 sq metres of floor space developed for new firms, including shops, coming to the town.

Early plans for reaching those targets included pedestrianising the area around Sudell Cross, and developing land around Freckleton Street bridge to create new large-scale retail development.

Coun Andy Kay, in charge of regeneration at Blackburn with Darwen Council, said: "The chief executive has requested an urgent meeting with the NWDA to explore various avenues such as re-phasing, and alternative short-term funding arrangements until the NWDA money becomes available in the future.

"Our immediate concern is the £13million allocated primarily to Blackburn town centre.

"This is a complicated process involving a range of different but inter-related funding sources and until detailed discussions have taken place it is not possible to say what the effects will be."

He added it wasn't a problem just affecting Blackburn with Darwen.

In Clitheroe, £1.2million has been earmarked for the next year for a project to look at economic development in the market town.

Several schemes aimed at Burnley have NWDA backing, including a £1.8million to improve the town centre.

A £60million business park proposed by the NWDA, which had got so far as for the agency to be offered the chance to buy the 38-hectare site from the Dunkenhalgh estate in Hyndburn, is among other schemes in the review.

The NWDA has overstretched its budget to £630m, when it shouldn't have gone over £430m, according to Coun Kay, although a NWDA spokesman refused to confirm by how much the organisation had over-committed itself.

A spokesman said: "We are now prioritising and re-phasing commitments, having taken a look at the projects to which we are legally contractable."