The sale of Oxford’s Westgate Centre is close to completion, giving fresh hope to the proposed £330m redevelopment of the shopping centre.

Capital Shopping Centres is believed to be ready to sell its stake in the Westgate to the Crown Estate.

The news was welcomed today by John Lewis, which wants to build a flagship store in a new-look Westgate. The company said it was ready to support the Crown Estate in bringing about the regeneration of the city centre.

There has been mounting speculation about Capital’s determination to proceed with the Westgate scheme, with the revamp having been in limbo since the start of the recession.

But news that Capital is close to selling its 85 per cent holding in the Westgate has taken Oxford City Council by surprise. The council, which has worked closely with Capital for almost a decade to try to deliver a new Westgate, appears to have been kept in the dark about the latest developments.

Capital, which is to publish its financial report next month, declined to confirm that it was preparing to selling its interest in the Westgate for a reported £57m. A spokesman said: “We continue to review our holdings in Oxford.”

But John Lewis released a statement to The Oxford Times welcoming the Crown Estate as the new owner of the Westgate.

Andrew Mills, John Lewis’s acquisitions and development manager, said: “John Lewis welcomes the Crown Estate as the new owner of the Westgate scheme and fully supports its desire to regenerate the city centre. John Lewis remains committed to bringing a full-line department store to Oxford.”

Capital is understood to have decided to sell having concluded that the project did not fit into its development investment criteria. A source told trade paper the Estates Gazette that the group felt that the price achieved for the Westgate reflected “good value” bearing in mind the risks associated with the development value.

The involvement of the Crown Estate, which holds a property portfolio valued at over £6bn, will boost hopes of shoppers and businesses who have come to despair about when the shopping centre and multistorey car park will finally be replaced after numerous planning battles.

The Crown Estate owns extensive holdings in central London, along with parkland, farms and sections of British coastline.

Historically the possession of the monarch, the Crown Estate is no longer the private property of the reigning monarch. The surplus revenue from the estate is paid each year to the Treasury. The Crown Estate is formally accountable to Parliament.

The acquisition of the Westgate would fit into the Crown Estate’s strategy to diversify its real estate holdings away from central London.

Last month, it acquired a 50 per cent stake in the Princesshay Shopping Centre in Exeter for close to £100m.

A spokesman said: “The Crown Estate is often in talks regarding potential purchases, but we do not comment on market speculation surrounding these discussions.”

Businessman Graham Jones, of the Rescue Oxford commercial pressure group, said he hoped a sale would give new momentum to improving Oxford as a shopping centre.

He said: “This is one of those situations where we want to see things moving forward. But clearly there are many questions that we need to get answers to.”

Bob Price, the leader of Oxford City Council, said: “I cannot tell you anything about a sale.

“We have some meetings next month with the John Lewis Partnership and the developers, which we are expecting to go ahead. We had some meetings before Christmas.

“As far as we are concerned progress on the Westgate is slow but still positive.”