Ministers will announce this morning that the Olympic Stadium deal with West Ham and Newham council has collapsed, according to reports.
A ministerial statement is expected around lunchtime. According to news agency PA, the stadium will remain in public ownership and leased out to an anchor tenant following a new tender process.
A legal challenge by Tottenham Hotspur has dogged the process since the Olympic Park Legacy Company selected West Ham over Spurs earlier this year as the preferred future occupier for the £486m stadium. A further challenge by Leyton Orient has also overshadowed proceedings.
At an oral hearing in the High Court in August, Justice Collins gave permission for full judicial review of the decision to award West Ham the stadium.
Spurs claimed that a £40m loan from Newham council to West Ham constitutes illegal state aid and the judge ruled that this claim was arguable.
State aid is illegal under European law, which does not allow public money to be used to confer a competitive advantage on private companies.
PA reports that under the new tender process any costs of transforming the stadium after the 2012 Games will be covered by the Olympic Park Legacy Company. Prospective tenants will then be asked to bid for the stadium with the running track remaining in place.
The tenants would pay an annual rent to the OPLC which could actually prove to be less costly for the likes of West Ham.
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