The project was to involve building a car park with 1,000 spaces on rural land near the M40, with 20 buses taking passengers to and from the towns.

But problems with a similar service for Stratford have left Warwickshire County Council officers fearful of the cost - and they hope councillors will agree next week that the project has no future.

The council admitted this week that £250,000 of council taxpayer's money had so far been spent on the project.

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Adrian Hart, the council's transport team leader, said: "It's sad - it's never nice not to pursue a scheme.

"We just felt that the level of funding it would require would have been too high."

The government had set aside £12 million for the scheme, with the county council contributing £1.8 million.

But the arguments on which the funding was secured have proved flawed following the experience of Stratford's park and ride, which currently requires an annual subsidy of £300,000 a year - as many drivers still prefer parking in the town centre.

A study by consultants shows that all-day parking charges in Leamington would have to rise to £8.50 to persuade motorists to use park and ride. The current maximum charge is £5.50.

A report written for a county council cabinet meeting next Thursday states: "Such price increases and the extension of on-street restrictions would affect many people and therefore may be difficult to implement.

"The effect on the economic vitality of Leamington and Warwick would be difficult to predict."

But the news has delighted Judy Cobham, who lives off Banbury Road, Grays Mallory.

She has worked tirelessly to create an "environmental haven" around her home, having researched indigenous Warwick- shire trees and plants, and had feared such beauty would be lost until learning of the council's change of plan.

She said: "It's excellent that they are refraining from carrying out what is a very grandiose scheme."

The project was part of a package of ideas intended to transform transport in and around Leamington.

Other related schemes, such as Warwick's new bus station, are still going ahead.