The Audit Commission, the public spending watchdog, has told Oxford City Council it has so far failed to prove it got the highest price for land on which the Kassam Stadium was built.

The Oxford Mail has obtained a letter showing a war of words has erupted between the Town Hall and district auditor Andy Burns who, it appears, has suggested the authority may have failed in its legal duty by not getting the best price for the 10-acre plot on Minchery Farm, in Blackbird Leys, when selling it to Firoz Kassam for £1.294m in 2001.

Mr Kassam, the former chairman of Oxford United Football Club, still owns the freehold on the land. There is no suggestion he acted improperly during the sale.

However, city council lawyer Lindsay Cane has asked Mr Burns to reconsider preliminary findings during his investigation of the sale stating the authority acted properly during a "complex and fast-moving" process.

Mr Burns is still gathering evidence before publishing his findings next month.

However, the Mail has been passed a leaked a copy of an eight-page letter in which Mr Cane told Mr Burns the city council "repeatedly demonstrated that "it got the best price".

The letter, which was passed to the Mail by a council source, also stated Mr Burns was concerned councillors were "not fully appraised of all the financial implications of the deal" and the authority failed to get a valuation of the land in the condition in which it was sold.

In his letter to Mr Burns, Mr Cane said: "We are disappointed the conclusions you have reached seem to be materially at variance with our own.

"The council remains of the view that in disposing of its land at Minchery Farm it did in fact obtain the best consideration reasonably obtainable and, by doing so, complied with its obligations."

An Audit Commission source told the Mail the city council could yet face a High Court hearing over the land sale and "a possible outcome" was that officers could be sacked.

However, many who worked at the Town Hall at the time no longer do so now.

A spokesman for Oxford City Council added: "This letter forms part of the ongoing discussions between the council and the district auditor in regard to the Audit Commission's concerns over the sale of the land at Minchery Farm and the council's response to those concerns.

"Until the final report is issued we will not be commenting further."