A huge blow has been dealt to waste disposal plans for Brighton, Hove and East Sussex.

The Newhaven Economic Partnership (NEP) will give £380,000 to help a French consortium buy Newhaven Port - but only if it blocks plans to build an incinerator in the town.

The sale of the run-down port, currently owned by Sea Containers, is expected to be finalised in the next three-to-six months.

The land the French want to buy includes North Quay, which has been earmarked for an incinerator in waste plans put forward by East Sussex County Council and Brighton and Hove Council.

The condition of the cash grant from the NEP is being widely applauded by locals.

They say an incinerator would destroy efforts to breathe life into the town, which has been ailing since cross-Channel freight trade and a ferry link stopped.

NEP chairman Henry Ball said at a public meeting yesterday: "We will be saying if you want our participation in this project we would like to get the new organisation to covenant with us that it will not use the land which is purchased to build an incinerator. The covenant would apply to any subsequent sale of the land. Our investigations have concluded an incinerator would have an adverse economic impact on the town."

Mr Ball said the NEP, which manages private and public regeneration grants, said the group was acting within its "terms of reference" to promote the economic health of the area.

He added: "In this way, we can combine a very positive development for the town with prohibiting what is seen as a very negative development."

The covenant would be subject to compliance with English, French and European law.

The NEP said the cash given towards the port purchase would be used to invest in the physical infrastructure of the harbour and benefit residents.

East Sussex County Council leader David Rogers, who represents Newhaven, said:

"It is a double-win situation. What the NEP needs to do is act in the regeneration interests of New-haven and it is clear businesses are united against the damage an incinerator would cause."

The waste plans will go to a public inquiry at the end of the year. If the councils still want to press ahead with building an incinerator in Newhaven, they could try to compulsorily purchase the land.

Jean-Marcel Pietri, general director of the Dieppe Chamber of Commerce, which is a member of the buy-out consortium, said the French wanted to work with the NEP in the econ-omic interests of both towns.

He said major investment to deepen the harbour and replace the infrastructure was needed to transform Newhaven into a thriving port again.

The consortium, led by the French local authority of the Seine-Maritime, has signed a deal with Corsica Ferries to run an all-year passenger and freight ferry from the end of February.

Peter Jones, leader of East Sussex County Council's opposition Tory group, said: "If they go ahead on that course they might not have the power to overturn something that has been supported by a Government inspector and the county council. The county would have two choices, it could either look for another site or consider compulsory purchase if that was deemed the only site suitable in the western part of the county, but that is a long way down the road."

Councillor John Ballance, Cabinet environment councillor for Brighton and Hove Council, was stunned to hear the news, broken to him by the Argus. He said:

"Whether this clause is there or not there will be a public inquiry and there is always the option of compulsory purchase."