LONG-running plans to redevelop Silver Hill could be hit by a fresh setback.

Eric Pickles, secretary of state for communities and local government, approved a compulsory purchase order in March to allow developers to secure land and start work.

But London & Henley, which owns part of the site, has launched a legal challenge against that decision, which could end with permission being overturned.

The city council and developer partner Henderson Global Investors confirmed the challenge last Friday. Work on the £135m scheme, however, can begin, as the CPO remains valid.

Martin Perry, director of retail property development at Henderson, said: “We are still 100 per cent confident and do not expect to have to change our plans or timelines.

“It’s understandable in a process like this London & Henley would seek any legal route available to them to stop the compulsory acquisition of their land and we just have to deal with that.

“The CPO was confirmed and is valid so it does not stop us; we can go forward and take the land, we just have someone trying to overturn the legality of the secretary of state’s decision.

“We are taking it very seriously but we are moving forward.”

Council deputy leader Rob Humby said the council would meet Henderson in two weeks when leader Keith Wood, who is currently away, returns.

He said: “We hope to go ahead within our current timeline and there is nothing to stop us doing that, but this matter is in the developer’s hands at the moment.

“It is not holding us up, but we need to talk to the developer to find out what the position is and get this issue resolved.”

It is unknown how long it will take for the challenge to be heard.

London & Henley was among several businesses to oppose the scheme at a public inquiry last September, and also had its own vision for redevelopment of the site rejected.

The re-development covers six acres — around a quarter of Winchester city centre — and is the largest in the area since the Brooks Centre was built in the late 1980s.

The proposals include shops and flats around a network of streets that link Friarsgate and the Broadway. There will be a new public car park and bus interchange.

It will replace the existing surface car parking, the bus station, and buildings from the 1950s and 60s.

Opinion on the scheme is divided.

Several city architects and businesses have criticised it as out of date and not viable due to the recession, while others in the business community said it would boost the city centre and bring in more shoppers.

They said to scrap the current plans and start again would mean it could be decades before the area is revitalised.

London & Henley was unavailable for comment.