Derby City Council has scrapped plans to build a controversial cycle track on a nature reserve close to the city’s Park Pride stadium with a lengthy legal battle with environmental campaigners meaning it is no longer financially viable.

Opponents of the 1.5km, closed road circuit have hailed the news as "good news for wildlife, both locally and nationally." But the councillor in charge of the project says it is a setback to the city’s cycling ambition, while Sustrans says it is a “big missed opportunity.”

According to the Derby Telegraph, Martin Repton, the council’s cabinet member for leisure and culture, said that he was “very unhappy with this course of events, as our vision of becoming a regional centre for cycling excellence is now under serious threat”.

Matt Easter, Sustrans’ East Midlands regional director said: “From a cycling point of view I’m clearly disappointed. A closed-circuit track was a great opportunity for people to cycle and learn to ride a bike in a safe environment. Hopefully, this decision will not put the people of Derby off using their bikes.

“I can see where the Derbyshire Wildlife Trust is coming from but I feel that this is a big missed opportunity for the city and cycling in the city,” he continued.

“There are potentially other sites that could be used but none that make as much sense as Pride Park. It would have added a great deal to the Derby arena and velodrome project and would have been something that local people would have perhaps used more readily than the velodrome itself. It’s a great shame.”

Among those who opposed the track, which would have encroached on part of The Sanctuary nature reserve, were BBC TV wildlife presenter Chris Packham and award-winning Times sports journalist Simon Barnes.

Packham described the plans as a “wanton act of vandalism,” while Barnes, writing in his wildlife column for The Times, said that the track was “possibly illegal” and “certainly the first time that a local council has given permission to destroy a Local Nature Reserve," and he raised concerns that other local authorities might follow suit.

They supported calls from coalition campaign group Derbyshire Wildlife Trust, which had described the proposals as setting “a dangerous precedent.” Last month it succeeded in gaining an injunction to prevent further work on the land while it applied for a judicial review of the plans.

The following video, filmed by Derbyshire Aerial Photography at the end of February, shows the nature reserve and the extent of the preparatory ground-clearing work carried out by the council.

On the Hands Off The Sanctuary Bird Reserve at Pride Park, Derby page on Facebook, one commenter said: “The Council seemed to quite easily divide the cyclist lobby and conservationists – maybe the campaigners could look at how to avoid that unnecessary division, as it only plays into the developers' hands.

Reacting to the news that the project had been shelved, the Derbyshire Wildlife Trust's conservation manager, Tim Burch, said it was “good news for wildlife, both locally and nationally”.

He added: “The council did offer a compensatory site at Alvaston Scrubs but this was not suitable compensation as it would have entailed destroying one habitat on a designated Local Wildlife Site to create another, still resulting in an overall loss of wildlife habitats in the city.”

Plans to build the track close to Derby County FC’s Pride Park stadium and the Multi-Sports Arena, which is currently nearing completion and houses a velodrome, were first revealed in April 2011.

But the council said in a statement yesterday that the ongoing legal row over it meant that the project, already said to have cost “tens of thousands of pounds,” was no longer viable financially, and that planning permission had been withdrawn.

“Work required before the bird nesting season can now no-longer take place,” the statement said. “This means the project cannot be delivered utilising the contractors currently on site and this will increase costs beyond the budget currently available”.

Councillor Repton insisted: “The Sanctuary could have existed side-by-side with the cycle track. We are not talking about Motocross here. We are talking about cyclists. Just a hundred yards away you have a football stadium where there are often 25,000 screaming fans who seem to co-exist quite amicably with the wildlife.”

The legal battle may not yet be over, however, with the council saying an agreement with the Derbyshire Wildlife Trust, which provides it with advice on issues related to the natural environment, remaining in force.

That agreement will now be “formally reviewed” in relation to the cycle track plans, and the council says it will take legal action if it believes there has been a breach of its terms.

Derbyshire Wildlife Trust’s chief executive, Ed Green, maintained that its position had been clear throughout, saying: “We provided them with advice at every stage and at every stage we’ve advised them they shouldn’t be doing it.”