Campaigners in Camden have vowed to continue fighting against the High Speed 2 rail project – despite news that the HS2 link threatening to decimate Camden Town would be dropped.

Hundreds of homes are still earmarked for demolition and there are clear concerns over compensation and the impact that 10 years of construction will have on residents and businesses, including in Hampstead which remains threatened by HGVs thundering through its streets.

HS2 Ltd chairman Sir David Higgins’ published a report on Monday recommending that a controversial link between High Speed 1 services at St Pancras International and new High Speed 2 services at Euston should be dropped.

In it he also supports Chancellor George Osborne’s calls for a major redevelopment of Euston station, which has also led to fears that the interests of “powerful private developers” would trump the needs of the surrounding community.

Camden Council leader Cllr Sarah Hayward said: “The report represents something of a pyrrhic victory for Camden with still no mention by Sir David of the unfair and substandard mitigation and compensation for Camden and our residents.

“There’s no doubt that our campaigning, with our communities, has led to the recognition that HS2 will devastate Camden.”

She continued: “I urge people who care about Camden not to treat this report as a victory, but simply as a staging post.

“We must continue to fight this scheme and for better outcomes for Camden if government insists on pressing ahead following the developments.”

Liberal Democrat Cllr Chris Naylor, who organised Camden’s first public meeting on HS2 in April 2010, also urged caution but was quick to praise the ­efforts of residents who supported the campaign.

“I’m sure this grassroots protest has made a real difference,” he said. “But we still have to fight for a sensible project for Euston that isn’t going to subject Camden to years of construction traffic anyway.”

Campaign group SOS Camden, which has repeatedly threatened street-level action against HS2, remains scathing.

“The U-turn shows the huge incompetence of those behind HS2,” said Peter Jones, one of the group’s spokesmen. “The absurd High Speed 1 to High Speed 2 link was allowed to hang over the heads of Camden for so long despite being opposed by all the major stakeholders.

“They’ve caused unnecessary anxiety. And the new plans for Euston are making a virtue out of a dog’s dinner.

“The funding for it remains ­unclear and there’s a danger for the people of Euston that foreign investors will come in and acquire what is a public asset at a deep discount.

“Needless to say, SOS Camden will be keeping the developments of Euston under close scrutiny.”

Traders in Camden Town ­appeared more welcoming of the news with chief executive of Camden Town Unlimited, Simon Pitkeathley, saying businesses will “breathe a sigh of relief” at the axing of the link.

But Jessica Learmond-Criqui, who delivered a petition against HS2’s impact on Hampstead to Number 10 Downing Street last month, said: “Areas including Euston, Regent’s Park, Primrose Hill, Belsize and Hampstead face 10 years of traffic gridlock, illegal levels of pollution, massive demolition, 24 hour construction noise and little or no compensation for reduced property prices, bankrupt businesses and blight.”