Lewes District Council is poised to drop its High Court action against Brighton and Hove Albion's Falmer stadium.

It could mean an end to the delays which have been costing the club more than £50,000-aweek in lost revenue.

A month ago, the Government admitted it made a technical mistake when it approved the 22,000-seat arena and asked the major parties for their assent to quash the planning permission so it could reconsider its decision.

But Lewes District Council, which was challenging the planning permission in the High Court, was accused of delaying the saga by not making any announcement on how it intended to respond. A spokeswoman said as far as the council was concerned, the legal action was continuing and it was awaiting news of a court date.

Now the council has issued an ultimatum stating it will drop its court action as long as the Government promises to address 16 specific points it has raised when it considers the new planning application.

It also demands that John Prescott, who was recently replaced as Secretary of State by Ruth Kelly, would have no say in any new decision. The Government has indicated it agrees and the council's cabinet is expected to accept the request to overturn the planning permission when it meets on June 6.

Mr Prescott admitted he made a fundamental error in his Falmer decision last October by stating incorrectly that the entire stadium site was in the development boundary of Brighton and Hove.

A Lewes District Council spokeswoman said: "Whilst Mr Prescott has admitted to this particular mistake, he has failed to respond to any of the other grounds of the council's claim, of which there are 16 in total.

"We want a written assurance from the new Secretary of State that all the flaws identified in our challenge will be reconsidered before any new decision is issued. Provided the Secretary of State is willing to give us this assurance the case need not be heard in court."

A spokesman for the new Communities and Local Government department said Ms Kelly, who was promoted to the role following John Prescott's departure last week, would be considering all the evidence afresh, including Lewes District Council's 16 points. But he said the Government was only conceding on the boundary mistake issue.

The council spokeswoman added: "Lewes District Council, Falmer Parish Council and the South Downs Society have also asked for a written undertaking from Ruth Kelly that John Prescott will take no further part at all in the re-determination of the stadium application."

Among the 16 points that the council claims Mr Prescott got wrong are that he failed to acknowledge the strategic gap between Falmer village and the city of Brighton or the conflict with planning policies It alleges Mr Prescott wrongly concluded that the stadium is in the national interest and was unreasonable in attaching little weight to his first inspector's assessment of other sites.

Furthermore, the council says Mr Prescott wrongly took into account new evidence which it was not allowed to respond to and failed to consider other cases relating to large-scale development on protected landscapes.