PLANS for 40 affordable homes in Wychavon have been scrapped and another 108 put in jeopardy after the funding for them fell through.

The Government told the district council it will no longer be fully reimbursed for any money it donates to the development of cheaper homes in the area.

The council, like hundreds of others across the country, had already promised developers vast amounts of money in the belief it would receive Local Authority Social Housing Grants (LASHG).

Now four projects, promised a total LASHG amount of £660,000 are no longer going ahead, and a further nine schemes - assured £4.26m funding - are looking uncertain.

"We gave the developers the go-ahead in the belief we could make our contribution, but that it no longer the case," said a council spokesman.

The Government is now replacing the LASHG scheme with a bidding initiative whereby the housing associations apply for funding direct.

Evesham & Pershore Housing Association is one of the developers affected. It has decided to use the new rules for some of its remaining schemes, while it hopes others will go ahead thanks to savings.

"Fortunately, we have a 35-year business plan which takes into consideration anything like this," said a firm spokeswoman.

"But it won't be easy in the future to obtain funding. How much we will be affected remains to be seen

"It is a huge blow both for us and for those people who were looking for affordable accommodation in the Evesham and Pershore areas."

Spa Housing Association, also affected, has decided not to try to bid under the Government's new scheme, and is looking for alternative funding.

"When you receive a grant confirmation and then the money is withdrawn, it is very disappointing," said Richard Grounds, commercial director for the Festival Housing Group, which incorporates Spa.

"The LAHSG scheme was very important to us in helping to finance the building of affordable homes, and we are currently in the process of reviewing our options."