A £10m rail deal that could bring 200 jobs to the region may hinge on securing a five-acre piece of waste land.

Holgate Rail Industries said it needs 1.5 acres of the land for a rail link to a workshop at the Thrall wagonworks, in York, where it hopes to carry out maintenance to rail support vehicles.

But the plot is owned by the regional development agency Yorkshire Forward, which has not yet decided if it is willing to release the land.

Executives are worried the land may also be required by Jarvis if the firm moves from its base in the city's Leeman Road.

If Jarvis decides to relocate, it would clear the way for the so-called York Teardrop project, which envisages enough commercial development to create up to 6,000 jobs, combined with the construction of up to 3,000 homes.

Nigel Box, director of Holgate Rail Industries, said his firm needed an answer by the end of the month, or else it could be forced out of the equation.

"We've just come up against a brick wall," he said.

"The crucial piece of the jigsaw is Yorkshire Forward's five-acre site.

"Without it, there is no way we could operate.''

Mr Box said that his company would be willing to share the five-acre site with Jarvis if it moved from Leeman Road.

He said the firm would even work next to Jarvis at the Thrall complex.

"We're in a race against time," he said. "We've been forced to look elsewhere but we still want to come to York."

City of York Council leader Steve Galloway will meet Yorkshire Forward to try to break the deadlock before the end of the month.

A Yorkshire Forward spokesman said: "We're trying to do what we can for Holgate Rail Industries, but we can't jeopardise the York Central site.

"We're doing our best to keep all sides happy."

A spokesman for Jarvis said the company had yet to make a decision on the future of its Leeman Road depot.

"We will not be negotiating with anyone about the former Thrall site at present as this is only one of the options which we're exploring," he said