Cumbria Universty has put plans for a Caldew Riverside campus in Carlisle on hold due to the North West Development Agency refusing to pay decontamination costs.
Edinburgh-based RMJM architects, Arup in Sheffield, on M&E, and the Manchester office of Buro Happold, on engineering duties, were all appointed just two months ago to deliver the scheme, but plans to redevelop the Caldew Riverside site have been put on hold for at least ten years, possibly even scrapped.
A spokesman from the university said: "Carlisle City Council owns the land the campus was planned to be built on. They gave Tesco first option, but those discussions ended and the university was the intended end user but it never formally happened and due to the economic climate the situation has changed. So there is currently no end user."
The NWDA said it would not pay the £3.8m needed to make the former gasworks site safe without an agreed end user.
The riverside plot contains traces of toxic substances including arsenic, boron, benzene, naphthalene and phenol.
The Caldew Riverside campus was part of a £100m estates programme announced after Cumbria University was formed in 2007 by the merger of St Martin's College, Cumbria Institute of the Arts and the Cumbrian campuses of the University of Central Lancashire.
Caldew Riverside is a regeneration zone which is being promoted by Carlisle Renaissance, the economic development agency. The site is substantial and has an estimated developable area of nearly nine acres.
The Carlisle campus would have provided new build accommodation for the Faculty of Arts and Faculty of Business, Social Science and Sport along with a new university headquarters facility. The Faculty of Education was also planned to be moved to the Caldew Riverside site.