A TESCO plan to build a two-storey Extra store in the centre of Barnstaple is set to be deferred at the eleventh hour in the light of new Government planning advice.

North Devon Council officers had recommended conditional approval of the application to put the superstore on land which contains Tesco-owned Brian Ford's and the authority's works depot.

But new Government advice led Tesco to this week ask for a deferral of a decision, a move supported by council officers.

The Conservative-controlled council hopes to get £7.75million by selling the land to Tesco. Executive members who sit on the planning committee have denied facing a potential conflict of interest, as alleged by Lib Dem members.

At 8,858 square metres (about 29,000 square feet), the store, with parking for 500 cars, would be one of the biggest in Devon. The Tesco in Whiddon Valley is three miles away.

The new store would be more than double the size of Brian Ford's on a site the size of five football pitches.

Asda is considering submitting an application to build on the Leaderflush Shapland site, less than a mile from Brian Ford's.

The planning committee was due to meet today.

North Devon MP Nick Harvey urged the council to take new planning guidance from the Government fully into account.

A new planning policy published in December, which says local authorities should "proactively plan to promote competitive town centre environments and provide consumer choice", could have implications for how the council assesses the merit of Tesco's proposal.

Mr Harvey said: "Concerns have been expressed to me that the council's financial crisis may provide an incentive to agree Tesco's application in order to get their hands on the financial dividend which would come from selling the land to Tesco.

"The council must do the right thing in its judgement, but it must not look as if it is doing so in a hurry or by cutting corners."

At a committee meeting on December 2, members claimed the Tesco store would destroy Barnstaple's town centre.

The committee agreed to defer a decision pending further information about flooding from the Environment Agency (the site is at serious risk of flooding) and a review of the amount of non-food floorspace, overall design, and the petrol station.

The Environment Agency then had discussions with Tesco in December and concluded the development was acceptable provided a new link road was kept at a certain height.

The EA found the details of surface water drainage could be agreed with a condition to make sure the development did not make local flooding worse.

Many councillors feared the quantity of non-food items on sale (43% of the total) would damage local businesses who sold similar goods.

No other supermarket in the area has such a high proportion of non-food floorspace (the highest is Sainsbury's, which has 35%).

In response, Tesco said such goods were normally sold in such a store and customers expected them. Tesco said its retail assessment demonstrated there would be "no adverse impact on the viability of the town centre".

The council's planning department agreed with Tesco. Officers disagreed with councillors' concerns that the design of the Tesco was unacceptable. They pointed out the South West Design Review Panel said the design was "honest and contemporary".

In December Cllr Silvia Harrison (Cons) said the Brian Ford's site was "awful" and "a disgrace".

Councillors feared the petrol station could put others out of business. Tesco replied it was "essential" the filling station was on the site.

In conclusion, the planners had decided the Tesco application should be approved with conditions, including maintenance of a new link road and surface water.

Brian Ford's was given outline planning permission in July 2001 to build a 7,400sqm store. In October 2003 Brian Ford's was secretly sold to Tesco.

In August 2007, before the Tesco sale was revealed, Brian Ford's submitted a planning application for an 8,175sqm supermarket with petrol station and link road. That application was never determined.