Development plans at the City of Bath College have been put on hold because of a freeze on government funding.

Proposals for a £68 million rebuilding scheme at the college's Avon Street site have been delayed after the Learning and Skills Council decided to review its capital expenditure programme.

Principal Matt Atkinson said the announcement meant any funding decisions had been postponed until March.

He said: "This decision will undoubtedly cause a jam in the system and this may affect our ability to deliver a project within the initial timescales.

"It is regrettable that our plans have been affected in this way and until the outcomes of the LSC review are made clear, we are unable to assess the full impact on our college.

"The college remains committed to improving facilities for our students and is still hopeful that we can play a major role in the regeneration of the city."

Mr Atkinson added that a significant increase in the number of colleges from across the country coming forward for funding and the current economic climate were behind the LSC's decision.

Bath MP Don Foster is urging ministers to intervene and reverse the decision, saying that investment is needed to support the ailing construction sector.

He said: "This decision means a significant delay to the City of Bath College's plans to remodel their facilities and create new construction jobs in the city.

"Putting such a large-scale construction project on hold flies in the face of the Government's claims of investing to kickstart the economy. What's actually happening is the opposite.

"At a time when ministers should be looking to support the building industry, large scale projects are being put at risk."

An independent review is to take place into the operation of the national programme Building Colleges of the Future.

Former Audit Commission chief executive Sir Andrew Foster will be looking into how it can be made more effective in the current economic climate.

The 253 colleges that have already been granted detailed approval or have work already under way will not be affected.

The ambitious plans to transform the City of Bath College's dated 1960s buildings were announced in October, with Mr Atkinson describing his ambition to create "world-class" facilities.

It was initially thought that funding would be approved by September this year, so that construction work could begin in 2010.

The project was planned to be completed in 2014.