The National Audit Office (NAO) has confirmed it is looking into the highly controversial Pathfinder scheme, developed by Deputy Prime Minister John Prescott.
The £5 billion programme would see the bulldozing of thousands of Victorian terraces in a bid to regenerate inner cities in the North of England and the Midlands.
The decision by the NAO comes just days after communities secretary Ruth Kelly gave the go-ahead for 1,000 homes to be demolished in Liverpool, despite a High Court bid by a Liverpool grandmother to save the buildings (Conservationists battle to stop Liverpool bulldozers
Kelly has shown support for the heavily criticised scheme right from the start and has signalled her intent to carry on with the project by highlighting three further inner-city areas soon to be razed.
However, the fact that the NAO is looking into the scheme will spell a lack of confidence from some corners of the government, and should the results not be favourable toward the Pathfinder scheme, it could be very damaging to Ruth Kelly.
The demolition of vast swathes of Victorian housing in Liverpool is the largest clearance to be witnessed in the city since the 1960s, and Kelly plans to clear a further 6,800 Victorian and Edwardian terraces, overshadowing more than five years' of destruction inflicted by the Luftwaffe in the Second World War.
A spokeswoman for the NAO said: 'We are having an initial look into the Pathfinder scheme, but we have not launched a full study into the project yet. It is still in its very early stages and we have no further details to give.'by Richard Vaughan