Arrowcroft, whose Michael Aukett-designed scheme for a 12,500-seat arena, homes, shops and offices next to East Croydon Station is backed by Croydon Council, said it was dropping its legal fight in the wake of the authority's decision to seek a compulsory purchase order (CPO) for the site.
The Foster and Partners/Stanhope rival scheme includes offices, 550 homes, a park, a new home for the Warehouse Theatre and a variety of restaurants and cafés. Confusingly, permission for this scheme was granted by local government secretary Ruth Kelly following a public inquiry last year.
An Arrowcroft spokesman said: 'Croydon Council has issued a CPO which will involve an inquiry. The same issues raised by High Court action will be raised by the inquiry. Therefore there is little point in High Court action. This does not mean that Arrowcroft has changed its mind over the decision by Secretary of State.'
The row over the £660 million development has rumbled on for over five years, with both sides winning planning permission for the run-down and neglected site.
The hearing to approve Croydon Council's CPO is unlikely to be held until the autumn.