There are fears a new Wrexham theatre could affect two others

GallifordTry Construction, which submitted the lowest tender, has withdrawn from the project, leaving Wrexham council with no choice but to talk to the second lowest tender.

To enlist another building company which quoted a higher price could mean the project would cost more money.

It is the second financial setback for the local authority this week, after plans to build two new schools costing �12m went �3m over budget.

"Our commitment to providing Wrexham with a first-class theatre and conference centre remains unchanged," said Wrexham council leader Shan Wilkinson.

Objections

In July the Welsh Assembly Government offered the council a lifeline after it announced a one-off grant of up to �660,000.

The controversial project to be built at the Wrexham Library and Arts Centre had a funding shortfall of more than �800,000.

Despite that, local councillors voted in favour of the scheme.

There had been objections from many locals who feared the new theatre would steal audiences from existing theatres in the area - the Stiwt Theatre in Rhos and the William Aston Hall.

But its supporters convinced the council it would work in partnership with the other theatres.

The theatre and conference centre should be completed in 2005.