Croydon council has urged developer Stanhope to include plans for an arena on its £400m Croydon Gateway project – or risk losing its land to compulsory purchase order powers
The ultimatum came as Croydon's planning committee granted permission for a rival scheme by Arrowcroft over Christmas. Arrowcroft's scheme is favoured by the council because it includes a £50m arena for sports and entertainment.

Stanhope, which owns or controls all of the Croydon Gateway site, has proposed a mixed-use scheme with landmark buildings designed by Foster and Partners, but no arena. It has claimed plans for an arena do not fit the area and do not stack up financially.

Paul Scott, vice-chairman of the council's planning committee, said the council remained committed to the arena and hoped Stanhope would come on board.

"We're hoping Stanhope will see the writing on the wall and will work with the council to get a suitable arena. However, they may well not, and adopt a more aggressive stance."

The council has said it will pursue CPO powers in the final resort, which both sides agree would be a long, drawn-out process.

However, Stanhope chief executive David Camp claimed that its project, which is being supported by Schroders, could start on site in August 2004.

He said: "The Arrowcroft scheme is dependent on CPO procedures that will inevitably delay the project by many more years. The only logic for pursuing this route is the desire to see an arena on the site."

Stanhope's scheme is currently the subject of a public inquiry by the Office of the Deputy Prime Minister, due to report early this year.

The Arrowcroft project, designed by Michael Aukett Architects, still needs to be approved by the Government Office for London and the mayor.