Health chiefs have admitted defeat in their attempts to build a massive housing development on Oxford's Warneford Meadow.

The Oxfordshire and Buckinghamshire Mental Health Partnership NHS Trust wanted to sell off the 18-acre site in Headington for student accommodation, raising a huge sum of money that would have paid for "service improvements".

But a community campaign and the fact the plans were turned down by Oxford City Council led the trust to ditch plans to take its case to appeal. But it is expected to return with fresh proposals in the new year.

It said it would not challenge the council's decision, but would go back to the drawing board and reconsider its proposals.

Trust chief executive Julie Waldron sent an email to residents and community associations about the decision today.

In it, she said: "We have taken the decision not to pursue the appeal against the council for non-determination of our planning appeals, and I felt it important to share that decision with you immediately.

"The trust has used the time over the last few months to endeavour to find ways to resolve the current situation regarding the planning applications.

"The process of appeal has involved us in exploring the possibilities open to us and enabled us to think about the best way to progress our need for the land sale receipt balanced with the concerns of local residents and communities."

City council deputy leader David Rundle said: "It's positive news because going through the process of appeal would have been a lose-lose situation for taxpayers.

"At the same time, nobody assumes this is the end of the story."