Pioneering plans to run a post office out of a West Hampstead church look set to go-ahead thanks to a £50,000 funding boost.

The vicar at St James’ Church, Fr Andrew Cain, said he was “delighted” that Camden Council had agreed to back the project.

The West End Lane post office in West Hampstead is due to close in December and Fr Cain has been leading a campaign to run the service out of the church.

There were fears the scheme would have to be withdrawn after falling short of its minimum fundraising target of £250,000.

Fr Cain and local councillors then began lobbying the council in February for some Section 106 cash – money paid to the local authority by developers to off-set their impact.

The vicar said developers behind the nearby Blackburn Road student complex agreed to give the council £107,000 in a Section 106 agreement towards community facilities.

The calls sparked a wider debate about how the council allocates planning money and prompted opposition Liberal Democrat councillors to call for more transparency about the decision-making process.

A Freedom of Information request by the Ham&High also revealed how the council is sitting on £26.5million of unspent Section 106 money.

Following a meeting between Fr Cain and council chiefs at the end of May, where a 200-signature petition was handed over calling for the money, the council confirmed it would allocate £50,000 towards the post office scheme.

Fr Cain said: “We were delighted that the council has recognised the importance of the project and is willing to support it. I hope this is the start of greater transparency with the distribution of 106 money. That would be a very good thing.”

He said it was in the council’s interest to help fund the scheme after the local authority announced plans to move its cashier services to post offices.

“There are no other post offices in the community and if ours closes then there would be a whole chunk of the community that would have been denied access to cashier services,” said the vicar.

Around £220,000 has been raised through the church and charitable grants.

Fr Cain said the finer details of the post office project were being worked on and the next step is to secure planning permission and set-up a charity to run the service. He is also looking for catering and retail partners to work at the site.