The company behind a £2 billion regeneration plan that would have seen several housing estates demolished has dropped its bid to sue the council over the deal’s collapse.

Lendlease, the Australian firm that was signed up to work on the 6,000-home Haringey Development Vehicle (HDV), said it had reached a settlement with the local authority after councillors voted to pull the plug on the project.

Earlier this month, trade journal reported that Lendlease had filed a lawsuit against Haringey Council in a bid to claw back the money it stood to lose out on after the scheme was scrapped.

It said Lendlease had lodged papers with the Technology and Construction Court that deemed the council’s decision to be unlawful.

The firm’s European chief executive Dan Labbad wrote to the council in the summer claiming Lendlease had already put more than £5 million into the HDV and warning it could sue if the deal was axed.

But the local authority’s new Labour administration, which was elected in May on an anti-HDV platform, went ahead and scrapped the deal at a cabinet meeting on July 17.

A campaign by people who feared the HDV would not provide enough affordable homes led to the deselection of a number of Labour councillors who backed the deal in the run-up to the local elections.

The scheme would have led to the demolition of several Tottenham estates, including Broadwater Farm and Northumberland Park

A Lendlease spokesperson said: “While we remain disappointed about the decision not to proceed with the HDV, which was fully out of our control, we have now agreed a settlement with the council.

“This enables us to move forward and work together on the High Road West scheme, which will bring much-needed new homes, jobs and community facilities for the people of Haringey.”

High Road West is a £1 billion project to build 2,500 homes, along with a new library, learning centres and other facilities, in the area surrounding the new Tottenham Hotspur stadium.

But the scheme will involve the demolition of 297 homes on the Love Lane estate and could affect businesses on nearby industrial estates.

A Haringey Council spokesperson said: “Lendlease and Haringey have agreed final terms following the cessation of the HDV and there will be no further legal proceedings.

“This does not affect the High Road West scheme in north Tottenham, where the council and Lendlease continue to work together to create much-needed new homes, jobs and community facilities.”