Albion's hopes of a moving into a new stadium at Falmer have suffered a major setback.

Planning inspector Charles Hoile says the proposed site at Village Way North is too small.

The Brighton and Hove Local Plan inquiry, conducted by Mr Hoile, found "a provincial city's professional football club" was not a national consideration and should not override planning policy which restricts development on the South Downs.

Mr Hoile said only limited university expansion could be contemplated on the Falmer site and then only in exceptional circumstances.

Brighton and Hove City Council must now decide whether to accept the findings but Albion were last night playing down the significance of the report.

Deputy Prime Minister John Prescott will have the final say on a separate hearing into Falmer stadium conducted at the same time.

His office said last night the result was expected within the next two months.

Mr Prescott has the power to override the findings of both inquiries.

Mr Hoile listed four possible alternative sites for a new stadium which are Brighton Station, Withdean, Toad's Hole Valley and Sheepcote Valley.

He said Sheepcote Valley was not open countryside, had no great landscape value and added: "It might emerge as the least objectionable."

The Falmer site is supported by Brighton and Hove City Council, whose leader Ken Bodfish said: "We fight for football.

"We are in touch with the three MPs and we are urging all fans to write to John Prescott with their views."

The stadium plan received permission from city councillors subject to legal agreements with the club and Brighton University. But it was called in for a public inquiry by the Government.

Coun Bodfish said Sheepcote, a former tip, should not be considered because it had poor road and public transport access.

He said: "Does the inspector really understand the nature of the city?

"We still don't know what the other inspector will say.

"In the meantime we shall demonstrate the importance of football to the city."

Eric Huxham, chairman of Falmer Parish Council, one of the principle opponents of the stadium proposal, said the inspector's findings were significant.

He said: "This is what we have been saying all along, that they could not prove it was of national need and the site was too small.

"Hopefully the football inquiry will find likewise."

Lewes MP Norman Baker, another prominent opponent, said: "This underlines why many of us were unhappy about the proposals for a football stadium at Falmer.

"What is important now is we get the stadium inquiry result as soon as possible, so doubt is removed. In the meantime I hope in the interests of Brighton and Hove Albion that they and the council have a plan B."