OXFORD University has been warned by the city council that it may be forced to reduce the impact of its Castle Mill buildings.

The threat came as campaigners announced that a fighting fund has been created to fight the controversial scheme in the High Court.

The university won planning permission to build the accommodation blocks in Roger Dudman Way last year but protests began when users and neighbours of Port Meadow began to complain about their impact on the skyline.

Councillors have been told negotiations bet-ween city council officers and the university had failed to reach an agreement over minimising the impact on historic views from Port Meadow.

Oscar Van Nooijen – chairman of the council’s west area planning committee, which originally gave the scheme planning permission – has now written to university vice-chancellor Prof Andrew Hamilton setting out the committee’s frustration.

He said: “There is a perceived lack of progress and the university has not made its intentions clear as to how it intends to address in practical terms the concerns which have been expressed about the impact of the development.

“The planning committee instructed me to draw your attention to the existence of further compulsory remedial steps, which it may recommend to the city council in due course, including discontinuance proceedings in respect of the whole development.”

A discontinuance order can be used to force the removal or alteration of a building but it needs to be approved by the Secretary of State. It could also leave the council open to multi-million pound compensation claims.

Meanwhile, the Oxfordshire branch of the Campaign to Protect Rural England yesterday confirmed it would seek a judicial review of the planning permission. The CPRE is now seeking to raise £50,000 to cover legal costs.

Chairman Brian Wood said: “Legal advice we have received suggests that, however unintentionally, the council may have acted unlawfully at key moments in this planning process.”

Oxford City Council spokeswoman Louisa Dean said: “We have reviewed the claims and believe that these are unfounded. The council will defend the legal action, if it is pursued.”

University spokesman Matt Pickles said: “We have held numerous meetings with planning officers to discuss how to mitigate the impact. We understand that a report with the outcome of these discussions will go to the next planning committee meeting in May.”