The joint venture had been looking for public sector funding from the council to continue to develop the scheme.

However after Modus parent company Modus Ventures was placed into administration, the joint venture has notified the council that it is not in a position to deliver the proposed scheme.

Councillor Matthew Evans, leader of Newport City Council, said: "We have done all we can as a council to get this scheme to the stage where the developers had to come up with the funding and go on site. They have failed to do this and have now told us that because of the economic downturn they are currently not in a position to deliver the intended scheme.

"Such is the importance of this project for Newport we are not prepared to accept a scaled down version and will therefore open up the scheme to other interested parties."

The scheme covers an area comprising of Kingsway, Upper Dock Street, John Frost Square and the bus station. A key feature of the development will be to bring together Newport’s riverfront and commercial centre, allowing people to walk easily between the two areas.