RED tape has led to a delay of up to three months on a £3m town centre regeneration project.

The rebuilding of Stanley Bus Station has been heralded as a cornerstone in the former mining town's bid to reverse its decline in fortunes.

Contractors were due to move into Mary Street this week to begin work, but the construction work has been put on hold over a technicality with a grant application.

Mike Clark, Derwentside District Council's executive director, said: "We estimate we are looking at a three-month delay at the most, and the likelihood is it will be less than that.

"There is no fundamental problem and all of the external financing we need is secure."

The council has applied to the Urban Renaissance Programme fund, administered by the County Durham Sub-Regional Partnership, for £1.1m towards the project.

The original bid was due to be tabled last month. But the partnership ordered the council to resubmit the application after designers made significant changes to the plans.

New elements in the altered proposals included demolishing two commercial properties to create a link between the station and Front Street, in a bid to rejuvenate the retail heart of Stanley.

A partnership spokesman said: "The funding has not been withdrawn. Before the bid could be considered, we identified it needed further development, because the scheme itself had changed."

Work on the bus station is now due to start by June.

The project has three phases. The first is building a new bus station and demolishing the existing one, followed by creating the Front Street arcade link.

The third phase will be the redevelopment of the old bus station site for retail use.

Workers could still move in within weeks to begin knocking down two properties in Front Street - Bennett's estate agents and bookmakers William Hill after negotiations by the council with the property owners.

"A delay to the construction of the bus station does not mean there will be a delay in the breakthrough to Front Street," said Mr Clark.

The work looks likely to increase parking problems in the town centre. The bus station will be built on the Mary Street car park, with the loss of 54 car spaces.

The council has commissioned a study on car parking, covering Stanley, Consett and Lanchester. Mr Clark said the results would be made public next month.