Controversial plans for a new town and thousands of homes in the heart of Norfolk may founder because they could require additional millions from the government for road improvements.

Controversial plans for a new town and thousands of homes in the heart of Norfolk may founder because they could require additional millions from the government for road improvements.

An extra �80m may be needed to upgrade key southern bypass junctions at Thickthorn and Harford, according to a report.

Politicians from four councils covering the greater Norwich area last month struck a political deal over where to build 21,000 new homes in and around the city.

The greater Norwich plans are part of a flagship government policy to build more homes, which could see an eco-town built at Rackheath, north of the city.

Talks had initially stalled amid clashes between leaders at Norwich City Council and South Norfolk about whether to have development along the A140, while officers initially favoured larger settlements at areas such as Wymondham.

But after a compromise was agreed supporters, including South Norfolk Council, believed that reducing the scale of development in Wymondham and Hethersett to 2,200 and 1,000 homes would preserve the character of the areas and plans for an extra 1,800 homes at Long Stratton could help deliver the long-awaited bypass for the town.

But the deal also includes a new community of 2,000 homes at Mangreen to start after 2018, which would exceed the total housing limits.

Now a report due to be discussed by Norfolk County Council's cabinet on Monday concedes that the deal will cost more than former options and is 'likely to require significant investment at both the Thickthorn and Harford southern bypass junctions, (and) this might involve spending �40m each'.

It would also fail to pay for all of a new bypass at Long Stratton while the four councils had already estimated they faced a �350m shortfall in meeting the costs of building all the new homes, schools and roads needed.

And with the recession biting, house building rates, which were already below target, are set to fall even further.

The report, which is recommending the new totals, said that the full environmental and traffic impacts of public transport improvements on the A140 between Mangreen and the city centre had yet to be established and were 'clearly challenging'. It was also not clear if a planned railway station would be viable.

The dispersed nature of growth along the A11 corridor would also challenge the viability of a rapid high frequency bus link.

'The level of development at Long Stratton is insufficient to fully fund the bypass, other necessary infrastructure and the required level of affordable housing,' the report noted.

And the extra growth would also put pressure on high schools in Wymondham and Hethersett, while none of the growth in South Norfolk was of sufficient scale to support a new secondary school.

Adrian Gunson, county council cabinet member for planning and transportation, said the problem rested with the government because it was shoehorning councils to accept thousands of new homes without providing the cash to pay for them.

He said: 'I think the proposal is the best one taking all factors into account. If we were to build up the A11, where would we go after that? You would have an urban extension right up to Norwich.'

John Fuller, leader of South Norfolk Council, said the funding gap was already 'enormous'.

He added: 'It's our job to come up with a plan that reflects the way that people live their lives. People have told us they would rather see developments spread out across the district so that we maintain the special character of the district.'

Opposition Lib Dem councillors in South Norfolk have 'called in' the plans for a special session of the district's scrutiny committee, also on Monday, because of concerns.

Murray Gray, Lib Dem group leader, said: 'What is now proposed is a major change from ideas that were previously consulted on. Unless the plans are robust, sound and acceptable to our communities at this early stage, they will become a battleground between towns and villages that don't want to be overwhelmed and developers who want to build even more than is planned.'