A pioneering bid to create a village-style square in a Birmingham suburb is at the point of collapse because of a lack of funding and a policy of focusing public money on deprived inner city wards, community leaders have claimed.

The £6.3 million project aims to bring back the traditional role of a community public space centred around a local church in Kings Heath.

It has been hailed a blue-print for future urban regeneration across the country and is backed by a number of city notables including former council leader Sir Albert Bore, historian Carl Chinn, chief constable of West Midlands Police Paul Scott-Lee and local MPs.

But project leaders say they are being discriminated against because the area is considered too affluent compared to other inner city areas such as Balsall Heath, Saltley, Aston and Sparkbrook.

They also criticised a "doughnut effect" that sees millions of pounds pumped into regenerating the city centre but scant little for outer suburbs.

Brian Miles, one of the directors of the All Saints Community Development Company – a charitable organisation led by volunteers set up nine years ago, said: "Without some financial help – we have had it.

"It is weird that all the money gets ploughed into the city centre with all these grand schemes and we can’t get hold of any of it.

"Some years ago people were talking about the doughnut effect with all the jam in the middle and the rest outside, which they were trying to reverse.

"The reality of it is it hasn’t really happened. This scheme is genuinely in danger."

The charitable organisation has so far spent £2.3 million on the scheme, much of which was in the form of a bank loan. About £500,000 has been raised from local parishioners of the church.

Mr Miles criticised the lack of support available for regeneration schemes that were not in areas of deprivation.

"It is all based on wards and postcodes," he said.

"It seems as if you can live in one area and there is plenty of money but if you live down the road there is no money. A lot of the kids in schools in Kings Heath come from areas of deprivation.

"There are people coming into Kings Heath from a fair distance and they come from the deprived areas. That doesn’t seem to be a factor.

"If we can create a nice community resource in Kings Heath it is not just the so-called well-off people that benefit. The benefit is much more widespread than people who live in the vicinity." Phase one of the scheme – a new medical centre featuring a GP practice, pharmacy, podiatry, a minor surgery suite and community nurses – will open today in the grounds of All Saints Church on the corner of the High Street and Vicarage Road.

Phase two aims to see the addition of meeting rooms for hire, a youth centre, cafe and an indoor community area. The tree-lined village square spreading from the church to the High Street containing public benches was to be the final stage.

As well as being a focal point and meeting area, a regular farmers’ market was also planned to be held on the square.

The lack of cash for the project also now means that an opportunity to secure £1 million from a Government-backed fund called Futurebuilders is at risk of being missed.

Mr Miles added: "To release that we need about £200,000 under the rules. We have got to get our hands on that pretty quick, within the next couple of months.

"If we lose the Futurebuilders cash, then money from the Lottery we are trying to get won’t be enough. If we lose it the scheme will just fall like a pack of cards."