Controversial plans to build a wind farm have been dropped.

Energy4All has decided not to challenge a council's veto of a three-mast scheme at Gartree on the edge of Market Harborough.

The scheme was rejected in January when plans to create a new village of 1,000 homes nearby emerged.

The council said a wind farm was likely to stop the proposed multi-million-pound project, which included shops, a school and marina, going ahead.

However, Energy4All has had talks with developers William Davis and Hallam Land Management over a possible wind energy scheme for the project.

Campaigners have welcomed the wind farm decision but have pledged to monitor the company's activities.

Resident Shaughan Ferguson said: "We are pleased that the company has decided not to appeal on this project.

"We are not opposed to renewable energy but it was too close to where large numbers of people live and was too intrusive from a visibility perspective."

Energy4All development director John Malone said: "The proposed development of housing adjacent to our site emerged as a new factor late in the day, and was perceived to be a key issue by the council in turning down our plans.

"Rather than appeal on this scheme, we would prefer to explore opportunities with the housing developers, and redesign and resubmit an application for a new wind energy scheme."

Mr Mallone said talks had started with potential developers of the site but no firm plans had been formed.

He added: "I would like to thank all our supporters. We will be communicating with them once we have more to discuss."

The Harborough council planning committee said the three-mast scheme was unacceptable because it was too prominent.

Members said it did not take into account its impact on the nearby Grand Union Canal Conservation Area.

They feared it would have a detrimental impact on Market Harborough and the Welland Vale and prevent a large tract of land nearby being used to meet the district's housing needs.

ProWind Alliance spokesman Grahame Jordan said: "As I supported the scheme, the company has informed me of their decision.

"Energy4All is a small company and could not easily afford a planning appeal.

"We shall be interested in seeing what proposals are drawn up.

"It could be difficult to devise a scheme which is acceptable to people who want to sell houses next door."

Caroline Chave, for the agents of the village project, said the developers had been talking to the energy company.

But she said: "There are no wind energy proposals in the application we are drawing up which we hope to submit to the council in August."