Council leader Andrew Carter climbed behind the controls of a 140-tonne excavator yesterday after the job of demolishing a disused building on the land earmarked for the venue got under way.

The ceremony took place a day after the £650m Trinity Quarter shopping development became the latest in a series of major Leeds construction projects to be delayed or axed as a result of the credit crunch.

But Coun Carter said he was "very confident" that the much-anticipated arena scheme would not become another local victim of the nationwide economic downturn. He said: "We are determined to complete by the specified time – October or November 2012. "The importance of the project cannot be overestimated.

"I think, at the present moment, it's a sign of our confidence in the future of this city."

Demolition of the former Leeds Metropolitan University tower block which occupies part of the arena's five-acre Clay Pit Lane site is expected to take about 15 weeks.

A section of the levelled land will then be used as a temporary public car park while preparations continue for the start of construction work on the 12,500-seater facility.

Bosses at the city council are currently waiting to hear if the Government-backed regional development agency Yorkshire Forward has decided to part-finance the arena.

At yesterday's event, however, Coun Carter indicated that he believed funding for the scheme would not be an issue.