Top-level efforts are now underway to try to ensure the future of the £1.2bn EASEL project.

The Yorkshire Evening Post understands that senior Leeds City Council members and officers have been in talks with executives from developer Bellway in a bid to protect the plan from problems in the housing market.

The East and South East Leeds (EASEL) regeneration scheme is designed to provide 5,000 new homes and 2,000 jobs in areas such as Seacroft, Gipton and Harehills.

The project's success was partly based on forecasts that the housing market would continue to do well, with some of the money raised from the sales of houses built in the EASEL area ploughed back into the scheme.

But one effect of the credit crisis has been to depress the housing market, removing many potential buyers and so squeezing the amount of money available to be invested.

Just last March, Leeds City Council and developer Bellway signed an agreement to begin the first EASEL phase, which was to see nearly 750 new homes built in Gipton and Seacroft.

A council spokesman said: "It is a very difficult housing market at the moment and we clearly want to do everything we can to make sure this does not affect EASEL. It is vital to the future of east and south east Leeds, and the council only recently repeated its commitment to the project, which will use housing regeneration and job creation to transform the area.

"We don't want to see EASEL halted and the council and Bellway are working to make sure this doesn't happen."

Leeds East MP George Mudie called for the council and Bellway to open up the talks to seek funding from other sources in order to keep EASEL up and running.

Mr Mudie said he was concerned that EASEL area residents did not know the detail of the deal done between Bellway and the council.

He said: "They (Bellway) won the contract on the basis of all the things they were going to do in east Leeds, a swimming pool was mentioned, for example. There is a very good case, in the public interest, for funding discussions to take place with other people.

"There was a bouyant market for ten years. Then the contract was signed just months before the banks packed up and a worryingly deep recession began."

The council spokesman stressed that construction work was under way in two parts of the Easel area – Oak Tree Drive in Gipton and South Parkway in Seacroft.

He was unable to say, however, how many of the scheme's first phase of 743 homes would be built at those locations.

The spokesman also admitted that the five-year timescale for the initial stage had always been "dependent on the state of the housing market."

Terri Loney, chairwoman of residents' group Gipton Together, said she was at an EASEL board meeting three weeks ago, at which members were told there were possible difficulties ahead.

"We were told there were plans to keep it moving," she said.

Ms Loney said it appeared the scheme was moving into an uncertain time, which would mean enormous stress for people living in the EASEL area.

"They will effectively be in limbo. It has to be remembered we are talking about people's lives here," she said. "It is about five years since this was first spoken about, homes have been flattened and we have a council housing crisis. People could have been living in those homes."

Keith Wakefield, the council's opposition leader, said: "If EASEL does not go ahead as planned it would be a massive setback for regeneration in our city."