Multimillion-pound plans to regenerate part of Brighton have been thrown into serious doubt after a supermarket giant broke off its deal with a developer.

Tesco and St James’s Investment (SJI) have severed their ties following massive public anger over their plans rejuvenate the area around London Road.

SJI wanted to build a huge development of homes, shops and offices around a large Tesco store but huge opposition emerged during public consultation last year.

A petition signed by more than 1,000 people against SJI and Tesco's plans was handed to Brighton and Hove City Council by campaign group Another London Road.

Now both parties have agreed to go their separate ways - pointing to the negative public reaction as a major factor in their decision.

James Hepburn, SJI's project leader for the London Road scheme, said: “I can confirm that St James’s Investments have listened and will continue to listen to Brighton and are no longer working with Tesco in relation to the London Road site.”

A spokesman for Tesco added: “We have ended our partnership in Brighton with St James’s Investments. Following our exhibition last year, we are continuing to consider the scheme in the light of the many comments we have received.”

Although no longer working together, both SJI and Tesco have bought up property around London Road and are still interested in pursuing separate developments.

But business leaders believe the end of the partnership means that any proposed schemes will not have to be on a much smaller-scale, if they go ahead at all.

Sources also said that any attempt by Tesco to build a supermarket on its own was likely to be refused planning permission.

Tony Mernagh, executive director of the Brighton and Hove Economic Partnership, said: "On the one hand the ending of the relationship may make it politically easier for SJI to develop the sites where they either own the freehold or leasehold interest because the public's perhaps unwarranted wariness of Tesco will be removed.

“But so too will the income that would have been generated from a new supermarket/department store. In the current climate SJI will probably be tempted to wait out the recession before deciding what to do with the large tracts of the London Road area that they now control.

“It would be a great pity if they decided to do nothing with them and in any event I would imagine their plans might be scaled back considerably."

Earlier this year the city council unveiled a proposed Supplementary Planning Document (SPD) for London Road which would act as a blueprint for how it would like the area to be developed.

The proposals include transforming the district into a Parisian-style tree-lined boulevard, a new public square and opening up back-streets to establish a cafe culture.

The document is currently out for public consultation before it becomes official council policy, likely to be in the autumn.

Mr Hepburn said SJI would wait until then before submitting new proposals for London Road.

He added: “We relish the opportunity to continue working alongside local businesses, residents and the council. In doing so we can look at the potential to provide flexible business accommodation, new shops, revitalise parking and numerous other uses to help deliver an improved public realm in a truly sustainable manner.”

Alan Buck, planning projects manager at the city council, said the split between SJI and Tesco would have no bearing on the SPD.

He added: “Our masterplan was never driven by either Tesco or SJI. We never get involved with who owns what from a planning point of view.

“When the plan is adopted we will be talking to land owners about where we think they can help bring forward some of the objectives outlined in the plan.”

Green councillor Keith Taylor, whose St Peter and North Laine ward contains London Road, predicted there would be “problems” if Tesco went for planning permission to build a supermarket on its own.

He said: “Right now the economic climate is such that I can't see any supermarket chain trying to build another store.

“But it they did I think there would be problems. There are already enough supermarkets there. Why on earth would anyone like any more?”

No one from Another London Road was available for comment last night but people visiting the SPD exhibition, being held in the former Co-op department store on London Road, were delighted to hear of the split between SJI and Tesco.

Sophie Harris, 40, of Arnold Street, said it would it be “fantastic” if Tesco dropped their plans for the area. She added: “All their stores are exactly the same. Up and down the country they are taking over, from small villages right through to big cities.

“We need more family business to improve the character of the area. Someone suggested the Co-op department store be turned into an indoor market. I think that's a great idea.”

Pauline Malin, 56, of Winchester Street, said: “There is a lot of variance between the existing shops but another supermarket would change that so people wouldn't come anyway.”