Developer Fort William Waterfront Ltd confirmed it was abandoning the scheme because it was “not capable of being funded in today’s market.”

The project planned to transform Fort William town centre by building 300 houses, a 60,000sq ft supermarket, offices, new library and leisure facilities on the 92-acre site.

Fort William Waterfront Ltd was made up of Tulloch Ltd, James Keiller Estates Ltd, Uplands Developments Ltd and Finlay Finlayson of the Crannog Concept.

A consortium spokesman said: “It is with reluctance that we withdraw from the development. The consortium has put in a great deal of time, work and expense to progressing the project which we felt was imaginative and beneficial to the town and wider area.

“However, our timing was not ideal because the global economic situation has changed and it is clear from our inquiries that the scheme is not capable of being funded in today’s market.”

Highland Council said it would continue to investigate how to maximise the potential of the waterfront.

Councillor Michael Foxley, leader of the council’s administration, said: “Looking to the future, our ownership of the seabed means that when economic conditions change and if the right scheme comes along, we remain in a position to secure the best result for Fort William town itself.”