The future of Cornwall's flagship eco-town development of up to 5,000 homes across former clay mines near St Austell has been thrown into doubt.
The company behind the Mid Cornwall eco-communities project said it was "scaling back" plans, blaming the economy and Cornwall's "evolving" planning system.
It is understood that four out of the six staff working in the St Austell office have been made redundant.
In a statement released late yesterday, Eco-Bos said it "could not progress significantly in the short term" and had taken a "pragmatic" decision to restructure.
Cornwall Council expressed concern at the announcement, which was revealed to the authority in a letter to Kevin Lavery. Eco-Bos Development Ltd – a joint venture company set up by Imerys and Swiss group Orascom – submitted a planning application to Cornwall Council for around 2,000 homes in February 2011.
However, this has been held "in abeyance" since September last year amid uncertainty over the council's Local Plan, which will be discussed next week.
Eco-Bos said it faced "two significant challenges in progressing at our intended pace.
"These are a continuing depressed economic situation adversely affecting the property sector and a planning framework still in a state of evolution.
"Whilst there is ultimately a strong belief in a positive outcome to the long term regeneration of Mid Cornwall, we feel that the prevailing conditions outlined above means that we will not progress significantly in the short term. "We therefore have to take a pragmatic and realistic approach in how we manage the situation and its impact on our project at this time.
"Eco-Bos has regrettably had to restructure in order to reflect the delays being brought about by the adverse conditions. This has led us to review our staffing requirements and levels for the foreseeable future."
Liberal Democrat MP for Newquay and St Austell Stephen Gilbert said he would meet the company to see what parts of the "potentially transformative project" could be progressed.
Cornwall Council said it was "obviously concerned" at the announcement. A spokesman added: "We will be looking at their announcement in detail and seeking an urgent discussion with the company to see what can be done to resolve the issues they identify.
"With regard to the comments on planning, there was no up to date planning framework in place when the new council was created in 2009.
"One of the council's top priorities was to fill this void and the development of the local plan, which sets out the framework for large scale projects, is on schedule and will be discussed by the full council next week."