Fort William Waterfront (FWW) - the group behind plans to transform the Scottish town's waterfront - has withdrawn from the £80m project as a result of the economic downturn.

The company was selected by Highland Council to lead the scheme in October 2007, which was set to include hotels, restaurants, a new residential scheme and car parking. However, FWW has now advised that it cannot proceed with plans as it could not secure the necessary funding for the development, which was scheduled for completion by 2013.

Michael Foxley, leader of Highland Council's administration, said: "Looking to the future, our ownership of the seabed means that when economic conditions change and if the right scheme comes along, we remain in a position to secure the best result for Fort William. "In addition, we have the wider waterfront development proposals, such as the marina and improvements to the environment near the old fort. We will now need to see how we can implement some of these in the short to medium term."

A FWW spokesperson added: "It is clear from our enquiries that the scheme is not capable of being funded in today's market. We thank Highland Council for the opportunity to asses this development and we wish them well on securing a replacement developer."