Lancaster City Council will continue to work with developers British Land and Lancaster University for the possible redevelopment of the city centre.
City councillors met to discuss the future of the Canal Corridor North project at Morecambe Town Hall.
The debate was held after Lancaster University revealed its backing for the scheme to revamp the area which includes the Dukes, the Grand, the former Mitchell’s Brewery and the Musicians’ Co-Op.
Councillors disagreed with the Greens’ motion to terminate the agreement.
Green councillor Tim Hamilton-Cox said the Dukes, the Grand and the Musicians’ Co-op will “remain stifled for even longer because the small amount of land and property required appear to be out of bounds whilst the existing agreement remains in place.”
Coun Janice Hanson, Labour’s cabinet member for regeneration, said: “Given that British Land has reaffirmed its commitment to the scheme, and Lancaster University is also now lending its support, it would have made little sense to withdraw from the development agreement at this time, a move which would have sent out completely the wrong signal.”