Oxford University is to cut back on its plan to extend Wolvercote to create new homes for its staff, it has emerged.

The university had initially planned to create 200 homes for university employees in a £40m scheme on the edge of the city.

It had hoped building could coincide with the £30m scheme to replace the Wolvercote viaduct on the A34, that is now under way.

But the plans are now being reviewed in a bid to reduce the costs, as the difficulties of developing the former Wolvercote Paper Mill site emerged.

Tim del Nevo, the university land agent, said: "The original scheme we came up with has proved too expensive.

"We cannot afford to do it. It was just too many millions of pounds for what we were going to end up with.

"We tried to make it too special. It just did not stack up because we were dealing with an ex-industrial site, which is much more expensive than a green field site to build on."

The site includes a neglected reservoir and is bordered by Mill Stream, a tributary of the River Thames.

An island on the river reinstated and an underground culvert opened to create a canal.

The university is now hoping to build 144 homes, with no planning application likely to come forward for at least another year.

Mr Del Nevo said: "We will be looking to make savings across the board and to find solutions to cope with water on the site. But the ethos of the scheme.

"It will still be high quality. The university does not intend to throw up something cheap and cheerful."

The university unveiled its plans for Wolvercote in late 2005. It said the scheme was to address a housing shortage that made it increasingly difficult to attract and retain staff.

But the university's 'self help' plan was complicated by Oxford city council's housing policy, demanding that at lest half of all new dwellings built in the city should be used for social housing.

Seven acres of the 17 acre site lie within the Green Belt, with the rest designated brownfield, The land has been owned by Oxford University Press since the 1850s.