Plans for the Western Link Road scheme, which would have provided access to the Grampian development, was abandoned last month after councillors voted 13 to 11 against the project.

The local authority is facing a £6m funding gap in its budget over the next financial year, partly due to a drop in its government grant. As a result, senior officers have described the council’s capital expenditure programme, which includes the Western Link Road, as “unsustainable”.

The project was due to come before the planning and regulatory service committee later this year. If approved it would have helped provide access for 200 affordable homes and a further 250 private housing in the pipeline.

As a result of the decision, if it can’t provide alternative access to the affordable homes site Moray Council will have to repay £2.7m plus interest to Grampian Housing Association for land sold to the council for that purpose. There will also be developer contributions of £652,000 that may have to be reimbursed to house builders who may not now be able to develop areas that would have been serviced by the new road and crossing.

Grampian Housing Association said it will explore other options for access to the site.

Craig Stirrat, director of business development, said: “Grampian Housing Association purchased the site in 2007 so we are naturally disappointed that the Western Link Road scheme isn’t being progressed. However, it is too early to write-off the housing development. We are still committed to it and are in discussions with The Moray Council to determine if there are other options for access to the site so that we can deliver in the region of 75 much needed affordable homes in Moray.”