Much loved cycle shop and repair business in north Oxford is set to continue trading despite being forced to leave its original home.

Walton Street Cycles, which operates from premises rented from W Lucy and Co, learned last year that it would be required to leave to make way for a gymnasium when its landlord sold up its Eagle Works factory for redevelopment.

Now owner John Wilson is to sign a contract for new premises, also rented from Lucy's, described as "nearby" though not within the proposed development of 249 new homes.

Lucy's, founded in 1812 and still employing 370 people in Oxford, owns about 50 north Oxford houses and sold off the site now containing Berkeley Homes' Waterside development.

The possible closure of the cycle shop had caused a furore among local residents and councillors.

City councillor Susannah Pressel said: "I am very relieved that Walton Street Cycles has won a reprieve. I would have been willing to lie down in the street outside the shop to save it."

Owner John Wilson remained cautiously optimistic. He said: "I am not saying anything until the ink is dry on the contract - and nothing is signed yet. But if all goes well, Lucy's will rent me premises at an acceptable rate."

Former county councillor and prospective Green city councillor Sushila Dhall said: "Of course I'm delighted that John Wilson has reached an agreement with Richard Dick (owner of Lucy's) but it is disappointing that Lucy's facade on the canal cannot be listed.

"It seems that all the huge developments in north Oxford are going ahead without any reference to what went before. In this case I would like to have seen the development in some way refer to the industrial past of the canal-side.

"If even part of the factory were to remain, it could make the canal area more of a tourist attraction, with a mix of workshop spaces, small businesses, cafes and residential parts."