Chris Smith, the Culture Secretary, ended weeks of confusion when he announced the FA would repay pounds 20m of Lottery cash originally earmarked for the new project. The money, as well as another pounds 40m to pounds 45m intended to adapt Wembley for athletics, will be used to help to fund the development of a separate venue for athletics.
The athletics stadium - central to a UK bid for the 2012 Olympic Games - may be an entirely new venture, but it seems more likely that the Twickenham rugby union stadium in south-west London will be adapted instead.
Twickenham is one of several options, including the expansion of Crystal Palace athletics track, open to Mr Smith. He will announce a final decision in January after negotiations with the British Olympic Association and the sport's governing body, UK Athletics.
Four weeks ago an independent consultants' report suggested that plans for the new pounds 475m Wembley were inappropriate for an Olympic bid.
The first concept for Wembley was as the centrepiece of England's bid to host football's World Cup in 2006, which could also be adapted to stage the Olympics. But - to the fury of the FA and the architect Lord Foster of Thames Bank - consultants concluded the required 80,000 capacity for athletics could not be achieved. The new Wembley is designed to seat 90,000 for football, falling to 68,000 when a platform for the athletics track is created.
The FA, leading the project through its subsidiary Wembley National Stadium Ltd (WNSL), will now receive pounds 100m of the pounds 120m originally allocated. Wembley will also be used for rugby league games, but will focus on football. The pounds 20m returned to Sport England, the Lottery grants distributor, will be "ring-fenced" to create a "permanent legacy for athletics in London".
Also available for the new athletics venue will be the pounds 40m to pounds 45m saved by not building a temporary platform for Wembley, a warm-up facility and alternative seating.
In a statement on the decision, Mr Smith said there was "general agreement" that Wembley should be the focus for football and rugby league and that alternative arrangements should be made for athletics.
"The separation of athletics from football and rugby league will ensure that the stadium needs of each sport are not compromised, the supporters of each sport are given certainty for the future of their national stadium, and resources can be focused on securing the best possible venue for each sport," Mr Smith said.
But Peter Ainsworth, the Tory culture spokesman, accused the Government of presiding over a fiasco. "Chris Smith described the plans as `stunning' in July. He then went on to say that the new stadium would be the centrepiece of our campaign to attract the world's premier sporting events to this country. How can this now happen when, after weeks of dither and delay, Chris Smith has effectively removed athletics, and with it our chances of bidding for an Olympic Games, from Wembley?"
Twickenham, whose local council wants a new rail link built to cope with the demand, is favourite to scoop the new athletics cash.
On Tuesday Ken Bates, the chairman of WNSL, had refused to hand back the pounds 20m to allow designers Walker McCue to begin work at Twickenham. But the way was opened for yesterday's decision when the FA agreed to pay pounds 20m towards track events being staged "in some shape or form".
WNSL will also pay 1 per cent of its turnover from rugby and football events into a charitable trust, which over 50 years will yield pounds 154m to be spent on athletics.
The compromise was reached by Bob Stubbs, chief executive of WNSL, who has worked hard to win the support of MPs and the Government for the new deal.Reuse content