David Pickering was giving evidence on the fourth day of the inquiry

David Pickering said the club folding would be "devastating" for the game in Wales and the national side.

The Scarlets want permission to build 450 houses on their Stradey Park ground to fund a new stadium in the town.

They claim they will go bust otherwise, but some residents oppose the plans, saying it will cause flooding problems.

Welsh Assembly Government-appointed planning inspector Clive Nield is conducting a public inquiry into the application.

Mr Pickering told the hearing on Friday: "We (the WRU) fully support the aims and objectives and fully understand the need for the development.

"The facilities at Stradey are just not good enough.

"My honest view is that this development is essential for the continuation of top-flight rugby in west Wales."

Mr Nield asked: "If the Scarlets went into liquidation there is no way the WRU would be able to bail them out?"

Mr Pickering replied: "Correct."

Over-development

"If the company were to go into liquidation it would have a devastating effect on professional rugby in west Wales," he added.

"It would also have an impact on the national team."

As the hearing was about to open last Tuesday, the Environment Agency withdrew its objection to plans.

But some living nearby maintain housing on such a scale would cause flooding and the over-development of the area.

The residents' action group also claims it conflicts with national planning policy.

The Scarlets and Carmarthenshire Council plan on jointly building the stadium on the opposite side of town.

But the club needs the receipts from the sale of Stradey Park to help pay its share.