A compensation claim of several million pounds could be made against a council if it scraps a major redevelopment project.

Landowners behind the proposed Eastside Business Park, Newhaven, said they would expect to be compensated if the scheme failed.

East Sussex County Council has threatened to pull out of the project unless the companies come up with more cash by the end of October.

The main landowner, the Baker Trust, said it would seek £2 million compensation if the authority carries out its threat.

Other landowners and companies involved are expected to demand more than £1 million if the business park, and a linked port access road, are scrapped.

John Husband, who acts for the Baker Trust, said: "The council has committed itself and is trying to say it has not. That is the problem.

"It has signed a contract to buy the land and go ahead with the project and now it is reneging on it."

The council's ruling Conservatives decided earlier this month to pull out of the project unless the private sector agreed to underwrite the risk of continuing with the scheme.

The council has already spent £2 million and companies involved claim the authority would only have to spend about £300,000 to stay in the project.

The £300,000 figure is thought to be close to what the council wants the private sector to contribute.

Daphne Bagshawe, the council's deputy leader, said it was right companies profiting from the scheme should pay more and the council had been advised it would not be liable for compensation.

She said: "We are willing to negotiate and wish to see a successful outcome. I am not prepared to see the public purse take all the risk."

Newhaven county councillor David Rogers said it was in the town's interest for the project to go ahead.

He said: "I don't think threats from either side are particularly helpful."