Plans for the redevelopment of Penzance Harbour as part of a multi-million pound scheme to improve the sea link between Cornwall and the Isles of Scilly have been scrapped.

The project, which included the construction of a new passenger and freight terminal building and extension of the harbour's existing facilities, encountered local opposition due to the proposals incorporating the site of the town's Battery Rocks beach. A Route Partnership comprising Cornwall County Council (CCC), the Council of the Isles of Scilly (CIS), Penwith District Council and the Duchy of Cornwall, which was established in 2003, submitted plans for the development in February.

However, the planning application has now been withdrawn in order to allow the Route Partnership to consider the outcome of a new study, which is investigating alternative options for the project. Philip Hygate, Route Partnership chair and CIS chief executive, said: "We have taken the decision to withdraw the planning application for all parties to have more time to consider the results of the options study before we take the project forward.

"Penzance Harbour proposals form an essential part of the overall project which aims to safeguard the long term future of the sea link to Scilly. I hope by reviewing the proposal now we will be able to seize the opportunity we have to deliver the project with funding from Europe and central government." Project director Tim Wood added: "The project requires delivery of two harbours, a new vessel and an operator. While the Penzance review is being undertaken work on all other elements of the project is continuing in order to ensure introduction of the improved service in time for the 2012 season."