A multi-million pound plan to bring major improvements to Newhaven is at risk because of a row over funding.

East Sussex County Council has warned it will pull out of the scheme to regenerate the area around Newhaven Harbour unless private sector companies put up more cash.

The council has issued an eight-week deadline to firms involved in the project to come up with funds which will help cover the authority's costs.

The council said companies likely to benefit from the £25 million project, which includes a business park, an outer port near the river mouth and a new access road, should pay more.

Critics rounded on the decision, claiming it could cost the council more to walk away from the scheme than it would to carry on.

It is understood the cost of staying in is estimated at between £476,00 and £726,00, while pulling out could cost the authority between £550,000 and £1.2 million.

The Conservative controlled council's ruling Cabinet agreed to press for cash guarantees at a closed meeting yesterday.

Deputy leader Daphne Bagshawe said the council had already pumped close to £2 million into the project and it was time the companies involved shared the burden.

She said: "If the scheme goes ahead it is worth a huge amount of money to the owners of the port, the owners of the land and so on. We think as a cabinet this is very reasonable and we expect it to be met.

"There comes a point when there has to be a better distribution in hard cash terms."

Among firms involved are landowners the Baker Trust and Parker Pens, developers the Bannertown Group and the port's new French owners.

Liberal Democrat MP Norman Baker, whose Lewes constituency includes Newhaven, said councillors were right to ask for the money from the companies.

But he said the council risked wasting £2 million already spent and should not pull out.