A public inquiry has got underway to examine plans for the £150m mixed-use redevelopment of Lancaster's canal corridor, after the scheme was called in by the government earlier this year.

The Castle View project, which was given the green light by Lancaster City Council in October, is facing opposition from English Heritage as the proposals include the demolition of 19th century buildings. Proposals drawn up by Centros, the London-based urban regeneration company, feature six public spaces, including a new park leading to the city's canal, the creation of canal-side restaurants and cafés and major improvements to the Dukes and the Grand theatres.

New premises for the Musicians' Co-operative 320,000sq ft (29,729sq m) of retail space and 179 residential units also form part of the scheme, which English Heritage argues will cause "irreversible damage" to the city. English Heritage, along with SAVE and local community group, It's Our City, will present their case to the inquiry, which started on 16 June and is expected to run for three weeks, in a bid to get the council's decision to grant planning permission overturned.

Henry Owen-John, north west planning and development director for English Heritage, said: "This scheme lets Lancaster down. We share the concern of many residents in Lancaster about these proposals as they would cause lasting harm to Lancaster and damage much of what makes the city such a distinctive and special place. "Lancaster deserves a sensitive retail scheme that integrates the historic significance of the area in the new development."