Earlier this year, two companies central to the plans for hundreds of new homes on land south of Liff village said the development was very much alive despite growing concerns at that time about financial markets and the need for costly junction improvements.

Cala Homes said they were keen to make a start on site this year and Gladedale expected to have homes available for sale next year. Both were said to be in the final stages of discussions with council planners, which it was hoped would lead to planning applications being lodged.

Since then, the squeeze on mortgages and uncertainties surrounding the availability of credit have conspired to make a massive new housing development an even less attractive proposition.

The knock-on effect of the credit crunch has already had a devastating impact on the construction industry where thousands of jobs lost have been lost and many companies have gone to the wall.

Gladedale shut its Dundee office in September with the loss of around 30 jobs blaming a “lack of mortgage availability and consumer confidence” which had affected sales. Asked by the Tele what their position was now in relation to the western gateway, the company said it remained committed to the project.

A spokeswoman said, “Gladedale is working with the council towards concluding the section 75 agreement which will allow the planning consent and road works at South Gray Village to progress. We are also in discussions with other developers involved and are collectively working towards the delivery of the Dundee Western Villages.”

Dundee City Council also said the development remained alive with a spokesman adding, “Despite the current uncertain financial climate, the fine details of the arrangements to bring forward the development of the western gateway are still being worked on.”

Cala Homes was asked to state its position, but was unable to provide a spokesperson to comment.

As many as 1500 homes could end up being built in countryside to the west of Dundee.