The owner of Oxford United said he was delighted that plans have been approved for a private hospital and new homes on the club's old ground. But Firoz Kassam immediately confused residents by announcing that his own company was planning to submit an alternative application - just for houses.

On Friday, Government inspectors approved plans for the Acland Hospital and Bellway Homes to build 87 flats and a hospital on the Manor Ground in Headington.

Mr Kassam said his company, Firoka, had drawn up an alternative proposal for houses to be built on the site - and not the hospital - which would be submitted shortly.

"The second application, if successful, could overrule the first," he said.

"We will weigh up the two options, and in the meantime, talks with Nuffield Hospitals will continue.

"We are mindful of taking into account the views of local residents but we also have to realise the value of the site."

Mr Kassam said Firoka expected to get back the £6m he paid for the ground, but would not be drawn on whether any proceeds of the sale would be ploughed back into the club.

His plans for a second, alternative application puzzled residents.

Stephanie Jenkins, of Kennett Road, Headington, who objected to the first set of plans on traffic grounds, said: "I don't know what Mr Kassam is up to and we will just have to wait and see.

"He must be over the moon, but it's fair to say that the people of Headington are sick as parrots.

"The football club was an amenity and residents wanted something useful to replace it - perhaps a school and a library.

"There are lots of hospitals in the area already and another one will generate even more traffic."

Earlier this year, Mr Kassam revealed that he bought the Manor Ground himself - because no-one else would risk buying it.

He added yesterday: "I took a big risk at the time buying the ground for £6m because the club desperately needed the money.

"I have had some sleepless nights but I would be surprised I didn't get £6m for the site now that it has the necessary planning permission."

Shareholders at the club's annual meeting approved a deal which saw Mr Kassam buy the ground.

Last week, city councillor John Goddard, who holds the planning portfolio on the executive board, criticised the county council for failing to oppose the plans for the Manor Ground on traffic grounds.

Cllr Goddard said the county council opposed the plans when they included 135 parking spaces but not after the number was dropped to 120. This he claimed, swung the planning inquiry in the applicant's favour.

Paul Staley, the county council's development control (transport) officer, said: "The council took the view that the applicants had made sufficient efforts to reduce the traffic impact and an appeal on this point would not be sustainable."