The UK’s largest regeneration project has hit a major hurdle, after a planning report branded a large part of the scheme “unviable”.

The Old Oak Park Development Corporation (OPDC) wants to build 26,500 homes at the future interchange of HS2 and Crossrail in Park Royal, West London.

But the mayoral corporation is locked in a land dispute with local business Car Giant – the used car retailer is the biggest in the world, employing 800 people, and doesn’t want to relocate.

Now an interim planning report has said that Car Giant land currently included in draft plans for the development should be removed.

The report emphasised that Car Giant is “a successful and highly profitable business” and that “its extinction simply does not make sense in planning terms”.

The inspector said that including the Car Giant land would make the entire plan “unsound” because the OPDC would not be able to hit its affordable housing target after paying the cost of relocating the business.

Geoff Warren, owner of Car Giant, said the report underlined concerns he had been raising publicly for months.

He said: “This is a complete and absolute disaster for the OPDC and vindicates everything Car Giant has been saying.

“The OPDC has overseen a scandalous waste of money in the pursuit of a flawed development strategy, despite us shouting from the rooftops that what they were planning could never be delivered.”

The OPDC could apply for an order to force Car Giant to sell as an alternative way to acquire the land.

However, Mr Warren has now called on the corporation to accept the report and remove the threat of compulsory purchase from his business.

But responding to Car Giant’s claims, David Lunts, chief executive of the OPDC, said there were positives in the report.

He said: “Whilst these are interim findings, and the process is not finalised, we are encouraged by the inspector’s intention to provide the green light for our first phase of development.”

The report says that a limited portion of initial building should be possible if Car Giant and the OPDC reach an agreement.

Mr Lunts rejected claims that Car Giant land could not be developed in the next two decades, saying “20 years is a long time”.

He added: “OPDC’s priority and commitment is delivering homes and jobs for Londoners through a scheme that serves the public interest.”