CASH from the sale of a sheltered housing block looks set to help boost a community scheme redeveloping the heart of Jericho.

Plans to create a new public square, shops, a community centre, a bridge over the Oxford Canal and to reopen the Jericho Boatyard have been hanging in the balance.

But now Oxford City Council is ready to fund housing to help make the project viable.

Four community groups are locked in negotiations to buy the boatyard site, after the developers Spring Residential went into administration.

But the city council says it will step in to remove a major obstacle to any deal by paying for affordable housing, which must be included in any scheme to develop the site.

The council is ready to plough in money from a £3m windfall from the sale of a derelict sheltered housing complex in Jericho.

Colin Cook, city council board member for city development, said that the sale of Grantham House, in Cranham Road, had created “a window of opportunity”.

He said: “Some of the money that we have could be used to put some housing on the boatyard. We are making Jericho a priority.

“But we will not hold on to the money for ever.”

The Town Hall says it is also ready to hand over council-owned land in Dawson Place to help transform the area between St Barnabas Church and the canal, with the once thriving boatyard now derelict after lengthy planning battles over its future.

Tony Joyce, the chairman of the Jericho Living Heritage Trust, who is heading the negotiations to buy the site, said: “We are working together to develop plans for the site to meet all the community’s aspirations and provide a significant contribution to the life of the Jericho area.”

Mr Joyce hoped a public square would provide a setting worthy of St Barnabas Church, now upgraded to a Grade I listed building.

A new bridge over the canal would provide a new pedestrian/cycle link running between the railway station and the new Oxford University campus being created on the Radcliffe Infirmary site between Walton Street and Woodstock Road.

He added: “There are plans for future commercial and retail activity to enliven the site and provide further income. There is also, of course, provision of a proper working boatyard for all the canal users on the site.”

The other groups involved are the Jericho Community Association, the Jericho Community Boatyard group and St Barnabas Parochial Church Council. Mr Joyce said the groups were still working to secure funding to buy the site with announcements expected in a few weeks.

Council policy states that anyone building more than 10 new homes must provide at least 50 per cent affordable housing. But a planning inspector ruled that 30 per cent could be sufficient for the boatyard site.