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Residents spoke of their anger today after the Government pulled £122 million of funding for a major regeneration project.
The money had been pledged to Portsmouth City Council to build 733 quality, eco-friendly council houses in one of the Hampshire city's most deprived areas.
The announcement that the funding has been withdrawn was received as a blow to the council's plans to improve living standards in the Somerstown area.
Councillor Steven Wylie, cabinet member for housing, said:
"We are bitterly disappointed to hear this news.
"We have worked tirelessly with the community to produce a vision for a bright new future for Somerstown which would have allowed us to build the high-quality housing that local people need and deserve.
"We have made every effort to ensure that our plans fulfilled all of the Government's stated regeneration objectives, which makes it even more disappointing to see support for the project withdrawn at this late stage.
"We will continue to look at other delivery options so that we can achieve the best possible outcome for local people.''
Resident Allison Hager said:
"I am angry that this money has been withdrawn.
"To take it back when the plans are so far down the line will really disappoint local people.
"What will happen to the younger generation who would have benefited from these changes in Somerstown?''
Work is still to go ahead on a new community, health and youth centre in a "state-of-the-art community hub'' along with 29 new council homes.