The merger of housebuilders Bryant and Beazer has been sunk by a £556 million rival bid for Bryant.

Construction giant Taylor Woodrow's agreed offer follows a fortnight of intense activity during which it tabled four bids for Bryant.

The deal, which will have to be approved by both companies' shareholders, creates the UK's fifth-largest housebuilder, with 6,000 homes a year and a turnover of about £845 million.

Bryant had previously resisted Taylor Woodrow's advances, preferring to stick to plans to merge with Beazer and create a new company called Domus.

But in a joint announcement today, Bryant said it had changed its position after Taylor Woodrow increased its offer to 207.4p a share.

Bryant's chairman Hubert Reid said the Taylor Woodrow proposals offered "superior value" for his company's shareholders.

He added: "The board of Bryant has long believed that shareholders in the housebuilding sector would benefit from the opportunities provided by consolidation.

"We also strongly believe in the need to improve quality and productivity in the industry, which was the vision behind the creation of Domus."

Bryant's about-turn came after rival housebuilder Persimmon on Friday unveiled a proposed £527 million bid for Beazer.

The merger of Bryant and Beazer came within two hours of being approved earlier this month but an extraordinary general meeting of Bryant shareholders was postponed when Taylor Woodrow stepped up its interest in the firm.

Taylor Woodrow has been keen for some time to develop its operations in the housebuilding sector.

Chairman Dr Robert Hawley said: "The addition of Bryant is an excellent strategic fit and accelerates the development of Taylor Woodrow's UK housing business."