Money once destined for a day centre for the elderly in west Oxford will now be spent instead on a young people's theatre.

When Oseney Court, a county council-run old people's home, closed in 1999, residents campaigned to ensure that the replacement would include accommodation for the elderly, plus a day centre for them to use.

New accommodation has now been built in Botley Road, but campaigners admitted last year that they had failed to get the day centre built.

Yesterday, it emerged that £500,000 had been set aside by Oxford City Council for the day centre, which could now be invested in something else.

Council leaders voted to spend half of it on the Pegasus Theatre in Magdalen Road, east Oxford. Further discussions will take place about the remaining £250,000.

The theatre has been awarded £2.7m from the Arts Council England Lottery capital funding scheme towards an overall redevelopment costing £5.8m.

Susanna Pressel, Labour city councillor for Jericho and Osney, who helped to campaign for the day centre, said: "It makes sense to allocate funding to another project if the day centre does not need it, but we haven't given up hope of some sort of facility in the area.

"I gather the county council's social services department is still considering some sort of resources centre which would include drop-in sessions for the elderly."

Executive board members were advised by finance officer Mark Luntley that £250,000 should be spent on the project to revamp the Pegasus.

He warned that other major fundraisers might not come up with the cash if the council failed to show its commitment. Green city councillor Sushila Dhall said: "Pegasus isn't just a theatre. There are lots of restless youngsters who find a place to express themselves and put their energy into something creative -- and that means a reduction in antisocial behaviour."

Pegasus general manager Simon Daykin said: "The city council's contribution is important and a fantastic step forward."

At present the theatre has 400 young people on its waiting list for youth theatre places.

The refurbishment would provide a new auditorium, two new rehearsal spaces and improve access for the disabled.

Keith Eddey, who led the Oseney Court Action pressure campaign to get a day centre built on the Botley Road site, was not available for comment yesterday.