Gleeson Homes replaced Barratt Homes last month as the joint-venture partner of Miller Homes in the developer-led Aire Regeneration Partnership.
Barratt Homes Leeds managing director Jim Holliday said the firm pulled out for purely financial reasons. He said: "The second-stage brief was financially demanding. We are a plc accountable to our shareholders and we did not feel the sales revenue generation possibilities of the Allerton Bywater site were sufficiently high to warrant the costs needed to promote the development."
Harry O'Donnell, managing director of Miller Ventures, said: "It is a demanding and challenging brief. We are being asked to embrace the sustainability agenda, to be innovative and creative and at the same time pledge zero defects. The changes in the consortium come down to the extent to which each of us was determined to accept change and innovation in the pace at which we build, and the cost of building.
"Of course, we have to be mindful of what value the property will realise in the market. But English Partnerships has put some seriously chunky sums of money into cleaning up the site. What you have is a cleaned-up site at a village close to Leeds, which is in its own way quite a charming place. It is actually quite an appealing proposition."
The Aire Regeneration Partnership was one of three consortia due to submit second-stage submissions in the competition to develop the 23 ha former colliery site.
The other two consortia shortlisted last November are led by Bellway Homes and US architect Daniel Libeskind.
The Allerton Bywater competition was launched by deputy prime minister John Prescott in July 1998 as the second of the government's Millennium Communities competitions.
The contests, run by English Partnerships, challenge the construction and development industries to produce models of sustainable development for the 21st century, incorporating the latest technology and high standards of urban planning and design.
Clive Wilding, managing director of Gleeson Homes, said he was pleased to be in the competition.
He said: "We have watched the competition with interest for some time. Because we are not volume housebuilders, we can afford to be a little bit different and accept wider challenges. Our customers are demanding more innovation and on that basis we accept we have to rise to that challenge."
English Partnerships will announce the winning consortium before the end of March.