Edinburgh's tram network is facing new turmoil after it was announced that another major component of the project has had to be shelved due to the economic downturn hitting council budgets.

The £87m “spur line” from the main tram route has been put on hold indefinitely, while construction continues on the first phase of the scheme.

Line 1b was intended to connect Haymarket to the north of Edinburgh, completing the Line 1 circle as it met Line 1a at Granton. Now only Line 1a and Line 2 are going to go ahead as part of the initial construction project currently underway. The lines will run across the city from Edinburgh Airport in the west to the Waterfront in the east, crossing the city centre via Princes Street.

David Mackay, chairman of Transport Initiatives Edinburgh, the company set up by the council to run the trams project, said: “The global economic recession has not spared Edinburgh and as such I believe that it is prudent to postpone Line 1b until such times that the climate for development is far more favourable.

“Our focus in the meantime is the delivery of Line 1a and the creation of a world-class integrated public transport network for the people of Edinburgh.”

Original plans had included proposals for additional lines, including an extension west to Newbridge, and "Line 3" extending south to the new Edinburgh Royal Infirmary at Little France. These plans were shelved due to lack of available funding, however the land needed is protected to allow for their possible construction at a later date.

Council leader Jenny Dawe, said: “Trams are vital in creating a modern, successful Edinburgh. Connecting the airport, West Edinburgh, the financial district, the city centre and the Waterfront will promote Edinburgh’s continued economic prosperity. I am pleased that this route is progressing well.”

She continued: “It is disappointing that in the current recession monies are not available to fund Line 1b. We will revisit this as soon as economic conditions improve. Experience elsewhere also suggests that, once operating, trams prove immensely popular with residents and businesses and create real demand for expansion. I am confident that this route will be the first of a world-class integrated public transport network for Edinburgh, including Line 1b and Line 3 to Little France.”

However, the viability of even this initial phase reaching completion has been called into question. Shirley-Anne Somerville, SNP MSP for the Lothians, has raised concerns about lack of available information regarding the financing of the project, and has requested project managers and Edinburgh City Council make a full statement regarding available funds.

This current setback comes only weeks after work on the key Princes Street phase of the scheme was delayed after a month long fall-out between tram bosses and project conglomerate BSC. Similarly, in November last year TIE's chief executive resigned amid criticism over the problem-plagued Mound closure.