Plans to return one of the Mornington Peninsula's best known pubs, Sorrento’s Continental Hotel, to its former glory have collapsed after the project was abandoned mid-construction and the site put up for sale.

Hotelier Julian Gerner had partnered with developer Steller Group to refurbish the pub and build an $80 million apartment block behind the Italianate-style hotel.

Development has halted at Sorrento's Continental Hotel. Credit:Simon Schluter

The four-storey limestone pub was built in 1875 and has the highest level of heritage protection due to its historical significance.

But Steller, which started work on the site last year, wound itself up last month, and has dismissed all of its staff.