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Westminster council could reject architect Sheppard Robson鈥檚 拢750m plan to build nearly 300 homes on the three-acre site of the former Middlesex Hospital in Fitzrovia due to the proposal鈥檚 鈥渦nacceptable鈥� level of affordable housing.

The long-delayed plans for mixed-use development on the site that was previously earmarked for the Candy Brothers 鈥楴oHo Square鈥� development come before Westminster council鈥檚 planning committee this week.

But a report to the committee said the level of affordable housing provision in the plans was 鈥渦nacceptable鈥�. Just 54 of the 291 homes or 17.4% of the total residential floor space in the scheme are designated affordable. The council insists that 25% of homes on new developments are affordable.

The report also said that a proposed payment of 拢2.09m to the council鈥檚 affordable housing fund by the developer, a joint venture between Icelandic bank Kaupthing, Aviva Investors and Exempla, 鈥渟hould be increased鈥� to 拢6.1m.

鈥淭he applicant disagrees with this and states that no more than 拢2.09m is affordable,鈥� the report added.

The report also called for the developer to increase its contribution to the cost of repairing and restoring the grade II-listed Victorian chapel, which is preserved within the plans, from a proposed 拢50,000 to 拢300,000.

If the two sides fail to come to an agreement the site will remain dormat. It is one of the largest in central London, bought for 拢175m in 2006.

The controversial site was once part-owned by the Candy Brothers, who dubbed the development 鈥楴oHo Square鈥� after a property development in New York City.

Development halted after planners rejected the scheme and Kaupthing went into administration, after which the Candys swapped their 33% stake for a stake in a Beverly Hills development also owned by the Iceland bank.

Architect Sheppard Robson was chosen to design the smaller development, which also includes shops, a school and a medical centre.

Kaupthing and minority investors Aviva and Exemplar dropped the much-maligned 鈥楴oHo鈥� name, which was derided by residents around the site in Fitzrovia.