PLANS for a Fourth Grace at Liverpool's Pier Head were in tatters last night after the controversial Cloud was sensationally scrapped.

The decision to abandon the project was made at a crisis meeting yesterday which was called after it emerged that

projected costs had already risen by almost £100m.

City Council chief executive Sir David Henshaw said: "The public sector partners have been determined to ensure that the Fourth Grace would not be a Millennium Dome Mark 2, with spiralling costs.

"The project has reached the point where that scenario, regrettably, became the most likely. We have unanimously decided to draw a line under the project and not proceed further.

The decision has shocked council leader Mike Storey and other city officials, and left them wondering what will now happen on the prestigious site before Capital of Culture year in 2008. The Cloud - the design was hated as much as it was loved by the public - was a key weapon in winning the title for Liverpool.

Its designer, celebrated architect Will Alsop, was equally shocked by the decision, and said: "I believe 150% in this project.

"I find it difficult to understand why it should be dropped in this way. This has come completely out of the blue and I am shocked. This is not the end."

It now seems certain that the site will be empty when Liverpool celebrates its Capital of Culture status in 2008.

The summit meeting was called at the offices of Liverpool Vision, the public-private city centre development agency, to discuss whether the plug should be pulled - or whether the project should go ahead.

Warning signs first emerged last week over costs and concerns over planning issues and it was clear that the Vision meeting would be a "make or break" gathering.

Liverpool Vision, Liverpool City Council, Northwest Development Agency and National Museums Liverpool, represented by Loyd Grossman, met at The Observatory, in Victoria Street.

Nobody was present at the meeting from Will Alsop's office of the developers, Neptune and Countryside Properties plc, the Essex-based developers. It emerged last night that £1.5m of public funding had so far been injected into the scheme.

One representative present said: "The decision emerged as a consensus, there was no one person demanding it be scrapped. But when we looked at the way it was going it no longer stacked up, the feeling was it was better to take what was a difficult decision now, rather than carry on."

Escalating costs, up almost £100m in a year, coupled with a change in design, led public funding bodies to abandon the project.

Last night Sir Bob Scott, who led Liverpool's culture bid, said: "I cannot begin to disguise my disappointment at the decision. I believed in Will Alsop's building and admired it and always believed it would be built by 2008. Sadly it is not going to happen.

"The site, though, remains as an opportunity to deliver something special for Liverpool. It has been bought and will be developed."

A spokesperson for the Fourth Grace Consortium said: "We are considering our position and expect talks to continue with our public sector partners. We have no further comment."

The consortium comprises Neptune, Liverpool Development Company and Essex based Countryside Developments plc.