Plans to build a £25m community centre have collapsed after a major backer pulled out citing budget constraints.

The NHS has announced it can no longer support plans for a new complex to be built near Southfields library, off Saffron Lane, Leicester.

The project would have included a GP surgery, dentist, event rooms and a new library, to replace the 1930s building known as the Pork Pie library.

But bosses at Leicester City Primary Care Trust say they cannot commit to the required £1m a year for the next 25 years.

The new centre would have served people living in Eyres Monsell and Saffron Lane.

Sue Green, of Eyres Monsell, said: "I'm disappointed and shocked.

"It would have benefited so many people. Having all that on one site makes it easier for people to get down there.

"We have already got one or two surgeries around here that do a good job, so it might be worth looking to see if we can have our own community centre without the health part.

"The library is badly in need of a revamp and, personally, I think we have to move with the times.

"A new library with more computers and extra facilities would have been better."

The complex would have been built on the former Newry Junior and Southfields Infant schools, in Southfields Drive.

Work on the project was due to start later this year and the centre had been due to open in 2012.

Ward councillor Rory Palmer said: "I'm very disappointed the PCT has made this decision.

"We have put a lot of time and effort into pushing this forward, it was a golden opportunity to provide much-needed facilities in that area.

"We will still look at solutions as to what to do with the site – I'm determined to do something on that but I can't make any assurances."

The project has fallen through because although the council had previously received £12.5m of Government money to fund it, the cash was given on condition the centre included health services.

Toby Sanders, director of primary and community care at NHS Leicester City, said: "We understand residents will be disappointed, as we are, but much has changed in the past 12 months and we have to adapt to this financial climate.

"On this basis, our estates strategy has altered and we can no longer commit to such a large-scale investment.

"This area of the city is well-served by a number of family doctors and we know there are issues with some of their existing premises.

"We will continue to work with surgeries to ensure they are fit-for-purpose as part of our city-wide improvement scheme."