The local Government "policeman" looks set to be called in over a £1.4 million land blunder at Turner Rise in Colchester.
Essex County Council lost its entitlement to a free 3.5-acre plot after it failed to complete vital paperwork on time.
The plot was to have been earmarked for a junior school for the fast-growing estate and residents are furious it has slipped through their fingers.
And today Colchester MP Bob Russell revealed he had advised householders to lodge a formal complaint with the Local Government Ombudsman over the controversial loss.
A number of residents contacted Mr Russell, angry that the plot had been "wasted", and he said he believed they had a "strong case of maladministration" against Essex County Council.
As a result of the oversight at County Hall, the land has stayed in the hands of the developers.
But yesterday county council education spokesman Mike Barnett said even if the land had been secured it was unlikely a new school would have been built there because the new 420-place Brinkley Grove at High Woods had subsequently been opened.
Mr Russell, also a borough councillor, however, does not agree and believes residents may be able to sue the authority for damages.
He said: "Developers will have added to the price of every house on Turner Rise a proportion of the value of the school site which the planners ruled had to be reserved for a primary school.
"Thanks to the county council, the developers have been handed back land valued at several hundred thousand pounds, money which the developers had already added to the price of existing houses they have sold on the estate.
"The developers have now, in effect, been offered a free site on which they no doubt hope to build yet more homes.
"It is my hope, however, that this land can be retained for a school, or failing that, for as much of it as possible to remain undeveloped as envisaged when planning permission for Turner Rise was given by the borough council."
Mr Barnett said the authority had already "expressed regret" for what had happened but he added it would "face up to any challenge that anyone considers".
He said: "We very much regret that we failed to meet the legal deadline but in hindsight I don't think it would have made the prospect of a school at Turner Rise any more likely in the near future because since Brinkley Grove opened, there are surplus places at nearby High Woods."
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