Mansell's Blackhill housing development in the east of the city, which has been hit by rising construction costs and slow sales, will now be completed two years after the original end date, in August 2012.

The council's Executive Committee agreed the proposal on Friday.

The partnership agreement will also be revised to allow the cost of securing and maintaining the remainder of the site until building can restart to be deducted from any surplus profits that both parties share.

In 2004 the local authority granted Mansell a license to occupy a council owned 8.27-hectare site in Blackhill. Mansell paid for the five year licence to develop the site for private housing and the Council also stood to receive 50 per cent of any surplus profits if house prices and the value of the land increased over this period.

The first two phases saw 124 homes sell well in the area but the completion of phases three and four by August 2009 were put in doubt as a result of the economic downturn.

The two parties agreed that due to the economic crisis, the existing contract was unfeasible and so to support the developer and ensure the 218-home development is completed the council has revised the original development agreement.

The housebuilder will now continue to market the houses and build to order as firm sales are confirmed.