Greenwich Millennium Village is likely to fall further behind schedule after a leading specialist contractor withdrew from the controversial £250m scheme.

Interior cladding subcontractor Ellis Hill, which was appointed in April, this week pulled out of the first phase of the development.

The move led to an admission by Greenwich Millennium Village Ltd that it could lead to delays.

A spokesman for GMV denied that the decision was the result of a payment dispute. He said: “Ellis Hill could not provide a system of cladding that met our specifications.”

The interior cladding that Ellis was to fit formed a part of the brief’s innovative design, and led to a more complex relationship than usual between client and subcontractor.

Ellis’s departure is set to delay the completion of two apartment blocks in the first phase, but GMV said it would not affect the second.

  GMV and main contractor Taylor Woodrow are deciding on a replacement.

Ellis Hill was unavailable to comment.

The latest setback follows last year’s resignation of HTA Architects from the project.