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Developers the Reuben brothers, Westfield and Stanhope have been kicked off the Stratford City project after failing to decide between them who would take the project forward.

London & Continental Railways, the firm with control over the Stratford City site, has terminated its development agreement with a company owned by the three developers after becoming exasperated by their inability to work together on the project.

The developers had been due to run an auction that would decide whether the Reubens and Westfield would deliver the £4bn scheme, which is key to the Olympics because it will house the media centre and the athletes' village.

The auction, for control of Stratford City Developments (SCDL), had been delayed over demands from each of the three parties for immunity from legal action after its conclusion.

Now lawyers are in for a bonanza after LCR moved to terminate its agreement with SCDL on Friday afternoon, a week after it first threatened to do so.

Stephen Jordan, managing director for property at LCR, said: "It is with sadness and reluctance that we issue this notice. LCR has taken all reasonable steps to try and ensure that SCDL has been afforded every opportunity to resolve its internal issues.

"This is decisive action required to safeguard Stratford City. We are no longer hopeful that the auction process could be brought to a successful conclusion and it is in the project's best interests that we now begin the process to terminate the contract.

"Maintaining timely delivery of Stratford City Zone 1 and essential infrastructure for the London 2012 Games is paramount. We cannot allow the current problems within SCDL to simply run and run. This decision does not jeopardise the provision of Olympic facilities on Stratford City land."