Sir John Chapple, president of the Zoological Society of London, the zoo's parent body, said the council feared that pressure to meet dividend payments to investors under the scheme might compromise the conservation philosophy the zoo wants to pursue. Sir John said: 'Zoos have no right to exist in the late 20th century unless they can show they are good for animals.'
Dr Jo Gipps, the zoo's chief executive, put together the in-house plan, which will cost about pounds 17m over about 10 years. Dr Gipps was not able to explain the 'detail' of the plan - which he said should be ready by January of next year.
But Sir John is confident the financial future of the zoo is secure. Two private benefactors, not yet named, have promised substantial sums of money. Both offers were dependent on the zoo opting for the in-house plan. One is thought to cover the pounds 1m costs of developing the children's zoo.
The zoo also has a pounds 1m gift from the Emir of Kuwait and about pounds 300,000 raised in last year's Save Our Zoo campaign.
Development at the zoo will proceed on an ad-hoc basis as sponsors come forward. The idea is that industrial, institutional and private investors should support individual capital projects and set aside money for running costs - often neglected in the past.
The zoo will focus on important breeding groups of animals, such as Asian lions, Sumatran tigers and lowland gorillas which are endangered in the wild.
David Laing said yesterday he was disappointed his plan was turned down and that he would pursue with renewed vigour the option of building a national aquarium, ecology centre and film theatre elsewhere in London.
Mr Laing did not rule out future involvement between the consortium and the zoo. He is thought to have spent about pounds 300,000 in drawing up his proposals.
Colin Tudge, who became a council member in the recent 'coup' against factions of management at the zoo, said: 'The crucial thing is that the zoo has defined what it is all about. We are going to appeal to people's intelligence rather than tell them they should come along and buy a rubber snake or whatever.'
'We are on the verge of showing we can pay our way and if that happens people are going to want to put money into the zoo.'
Mr Tudge, a linchpin in securing the zoo's future, was instrumental in shaping the public face of Chester Zoo, often held up as a role model for modern zoos.
Mr Tudge hopes to restore the listed, but dilapidated Mappin Terraces as homes for one or two species of bears. Estimates of the cost of restoring these stand at about pounds 13m. He also aims to set up a 'Friends of the Zoo' scheme, with a target of several hundred thousand subscribers, which could bring in several million pounds.
The council hopes yesterday's announcement will mark the end of several years of financial tightrope walking at the zoo. This reached crisis point in 1991, when the Government said it would not add to its pounds 10m once-and-for-all payment of 1988. All summer the zoo has lurched towards closure, planned for the end of September.
But the closure threat helped increase the numbers of visitors and the zoo has made more than 90 staff redundant and taken 'a severe disciplinary approach' to controlling costs.
Leading article, page 20