A nine-day public inquiry into the plans was held in January

Local people had been told the money - due to be handed over by the developer - would be reinvested in their area.

Council planning head Eifion Bowen said when the application was called in by the Welsh Assembly Government, it had to reconsider where it was spent.

A public inquiry into plans for 450 homes on the ground has been held.

The money is due to be handed as part of a section 106 agreement, which usually involves a developer making a donation to a local authority to be spent on roads or play areas.

The council's planning committee decided to spend the money locally when it discussed the scheme last July.

Mr Bowen told BBC Radio Cymru's Llinyn Mesur programme that as a result of the application being called in the council's planning committee had to reconsider where the cash will be spent.

He said that no rules have been broken in coming to this decision.

The Scarlets say they need to replace Stradey with a new ground

But Huw Jones of Stradey Residents Action Group, and Stradey councillor Keith Davies - the county's former director of education, said this money would not now be spent in the area.

They told Llinyn Mesur that the decision had widespread implications for local council tax payers.

It was claimed it would mean taking the money away from education and roads, leaving those services either in need of investment or paid for by taxpayers' money that need not be spent.

The Scarlets want to develop the land to pay for a new stadium, without which they say they will go bust.