SAINSBURY'S has dismissed speculation it is abandoning plans for a huge new store on York's outskirts - but revealed it is facing another planning hurdle.

The supermarket giant won planning permission in January to build a 60,000 sq ft store on the site of the current B & Q in Hull Road, despite more than 2,000 objections from local residents and traders who warned it would mean even more traffic in the busy road.

Secretary of State Eric Pickles decided in May not to order a public inquiry, apparently clearing away the final planning obstacle.

But it has now emerged that Sainsbury has submitted an appeal to the planning inspectorate for conditions around deliveries at the proposed store to be varied.

A spokesman said the company looked forward to a decision in the near future.

But the news comes as rumours have been growing among B & Q staff that the move may not go ahead for a considerable time - or at all.

According to notes of a recent Heslington East Community Forum, members were told: “It is believed that Sainsbury’s will not now be progressing with occupying the B&Q store on Hull Road.”

The comment was made by Janet O’Neill, of chartered town planning consultants O’Neill Planning Associates. She told The Press she had been told this by a member of staff. A separate source said he had heard that staff had been told the DIY store would remain open 'for at least the next two Christmases'.

But a B&Q spokesman said staff had simply been told there were currently no plans to make anyone redundant, and the planning issues over deliveries could cause a six-month delay.

And the Sainsbury spokesman said: "We look forward to a decision in the near future. We’re continuing to work on our plans for Hull Road, York."

Asked if this was a clear commitment to building the new store, he said: "I think I’ve been clear enough. We’re continuing to develop our plans and are looking to vary conditions around deliveries. We look forward to a decision on the appeal."

Rival supermarket retailer Tesco announced yesterday it was selling off more than a dozen sites it no longer wanted to develop, mostly in London and the south-east, to a property company in a £250 million deal.