A property developer has scrapped plans to build 85 new homes in East Oxford because he claims the city council's social housing quota has changed.

Eric Gadsden, managing director of WE Black, says he can no longer afford to go ahead with his proposed scheme on Railway Lane, Littlemore, which has been in the planning pipeline for five years and has cost him £5m.

When he first drew up his plans Mr Gadsden says he was happy to comply with the council's policy that all new developments with more than nine properties should be half social housing.

But planners now insist that the social housing element contains larger four or five-bedroomed homes, rather than just apartments.

Mr Gadsden says that because of this he would make a loss on the site, as the value of the social housing property was now more than half the private housing element and he would lose money as a result.

He added: "Before, the value of the social housing was about 38 per cent of the site value. Now it is 55 per cent. The build costs are more than a housing association will pay, and it is more profitable for us to mothball the whole site.

"In two years' time there will not be any low cost homes built in the city because the council will have forced every builder out."

Oliver McGovern managing director of MD Construction, based near Farmoor, said: "The problem with social housing is that it will be built at between 45 and 55 per cent of market value, which is effectively the build cost. The council could ask me to build a 15-home development and I would do it if only five of the properties were affordable homes instead of eight, but there is no negotiation."

Mr McGovern claims that some sites are now deliberately being underdeveloped, to keep them under the nine-home limit before the need for social housing kicks in.

Council figures show the housing waiting list now stands at 5,000, which it estimates will take five years to clear.

Charles Shaw, head of development at the city's major social housing provider, the Oxford Citizens Housing Association, said: "If the supply of homes is restricted, then prices will rise, which means more people will require social housing."

John Goddard, leader of the council and policy holder in charge of planning, said the social housing policy had been changed to meet the needs of families.

He added: "What we don't need are developments which are made up almost entirely of two-bedroomed flats.

"We do need a proper balance with larger flats and houses as in recent years it has been getting out of kilter. The proportions changed in the last few months after a substantial consultation and the only objections came from builders.

"Maybe the smaller builders should combine or become more efficient."

Michael Crofton Briggs, head of planning, added: "If developers are concerned about how this will affect their sites, then we would encourage them to talk to the planning department."