Plans to remodel a city centre community college may be scrapped because of a freeze on government funding.

Proposals for the £68 million rebuilding scheme at the Avon Street site of the City of Bath College have been delayed after the Learning and Skills Council decided to review its spending plans.

Principal Matt Atkinson said the announcement meant funding decisions had been postponed until March and placed the college's original hoped-for date of completion in jeopardy, casting doubt on the whole scheme.

He said: "This decision will undoubtedly cause a jam in the system and this may affect our ability to deliver a project within the initial timescales.

"The college remains committed to improving facilities for its students."

Mr Atkinson added that a significant increase in the number of colleges nationwide coming forward for funding and the economic climate were behind the decision.

Bath MP Don Foster is urging Ministers to intervene and reverse the decision.

He said: "This decision means a significant delay to the City of Bath College's plans to remodel their facilities and create new construction jobs in the city.

"Putting such a large-scale construction project on hold flies in the face of the Government's claims of investing to kick-start the economy.

"What's actually happening is the opposite."

An independent review is to take place into the operation of the national programme Building Colleges of the Future.

Former Audit Commission chief executive Sir Andrew Foster will look into how it can be made more effective in the economic climate.

The plans to transform the City of Bath College's dated 1960s buildings were announced in October, with Mr Atkinson describing his ambition to create world-class facilities.

It was initially thought funding would be approved by September this year, so work could begin in 2010.

The project would have meant tearing down all the 1960s buildings and starting from scratch with facilities fit for the 21st century.

Planned to be completed in 2014, the new facilities would be built around the £4m arts building, which opened last year. The college wants to develop hospitality and catering and building services provision, increasing the number and variety of courses.

Mr Atkinson said the new site would not lead to a significant increase in student numbers because the national population trend for the 16-18 age group was expected to level out over the next few years.

The City of Bath College has an annual turnover of £16m and 500 full-time staff.