A West Hampstead nursery’s dreams a new state-of-the-art building have been cruelly snatched away.

Sington Nursery had secured a �500,000 grant from the government to go towards premises in Fortune Green. Camden Council had agreed to build it and provide an extra �1.5million in funds.

The nursery is currently housed on the top floor of West Hampstead community centre and has no outside space.

Once a day, the children are walked across two roads to the Sumatra playground to get some fresh air. Its ethos is to provide affordable childcare options in the private sector.

But just a week before Christmas, the council pulled the plug on the plan and withdrew the funds. Left with �500,000 and no building to spend it on, mums from the nursery scrambled to do a deal with the local vicar to house the new nursery in Emmanuel Church’s grounds.

But the group has now heard from a council funding panel that the plans are not far enough along for it to qualify as “significantly progressed” by March 31 and the �500,000 will lapse.

Caroline Law, whose daughter Emily attends the nursery, has been at the forefront of the campaign for new premises. She is chairwoman of Camden community nurseries management committee.

She said: “In their interpretation of the meaning of the rules that it wasn’t sufficiently progressed, they didn’t give us a proper meaning of what that means we would have to achieve. But, basically, they weren’t prepared to sign off internally. At the same time, they didn’t give us a clear idea of why that was, or what it would take for us to fulfil the requirements.

“In terms of money, we are left with nothing. We are never going to get this sort of funding ever again.

“We are all mothers sitting here trying to be part of the Big Society – to provide good quality affordable childcare in the private sector – but that means that we need to have a decent play space.”

Ms Law added: “We had the money and now it is just going back to David Cameron.

“It won’t be used for a community group at all – that’s the madness, and nobody else can benefit from it because it was awarded to us already.”

Father Jonathan Kester, vicar of Emmanuel Church, had cleared the idea of using its grounds for the nursery with the relevant church authorities.

Father Kester said: “It is really sad. Helping Sington seemed like a perfect way for serving a particular part of the local community which was in need of something.

“We will be working with them to see how this can still be done.”

Susie Steiner, also on the management committee, said: “What we need now is a rich benefactor to step in.

“We plan to write to Education Secretary Michael Gove to alert him to the lunacy of the situation.

“The government keeps banging on about Big Society – and the voluntary sector filling the gaps left by rolling back the state – and then something like this happens and our hands are totally tied.”