The plans included a lift to provide access to a beach-side restaurant

He had planned to replace the site of the Rockland's hotel with a four-storey, 42-bedroom hotel, a restaurant and conference centre.

Two months ago, councillors granted permission for the old building to be knocked down and redeveloped.

Stein said the decision was financial as costs for the project had spiralled from an initial �1.5m to �6.5m.

The reason is, quite simply, that it is too expensive Rick Stein

The design for the so-called Blue Fin project included an inclined lift to transport guests down a cliff to a restaurant at Tolcarne Beach.

Newquay councillors had rejected the plans, but the scheme was given unanimous approval by Restormel Borough Council in February, and Stein had hoped the project would be completed by the end of 2005.

In a statement he said he was very depressed about the situation and felt that he was letting people down but that he had to consolidate his existing businesses in Padstow.

He said: "I have been very enthusiastic about opening a new hotel in Newquay. I've always found Newquay to be a vibrant town with great potential situated on some of the best coastline in Cornwall.

"Unfortunately we've decided not to continue to develop it. The reason is, quite simply, that it is too expensive.

"Whilst it would be possible to invite other investors on board, we have always pursued a policy of self-financing our business developments and �6m is just too much."

It is estimated he has already spent about �880,000 on the project so far, including �600,000 for the purchase of the existing building on the site and �280,000 having the former hotel prepared for demolition.

The property will now go back on the market.

Attracting investors

The leader of Restormel Borough Council, Joan Vincent, said: "We are extremely disappointed because this was going to be the flagship for the regeneration of Newquay.

"The loss of Rick Stein is quite major. He was going to be the lead name to attract other investors into the town.

"We'd like something of the same if we could get it. There may be other people interested in trying to develop the site. We'll just have to wait and see."

But the MP responsible for Newquay said he did not believe the town will suffer in the long-run from the decision.

Liberal Democrat Paul Tyler said: "Frankly, it's still looking good for the whole of that area because of the effort that everybody has been putting in to get some sensible regeneration proposals for it.

"I think this may be a hiccup in the process, but I don't think it'll be a permanent problem."