Birmingham is lacking in ambition by settling for a #249 million scaled-down redevelopment of New Street Station, it was claimed last night.

The criticism came from Sir Albert Bore, leader of the city council Labour opposition group, who said it would be better to fight for a more extensive #383 million transformation of the station and surrounding shopping area.

Sir Albert delivered his comments at a cabinet meeting, where the council's ruling Conservative-Liberal Democrat coalition backed the New Street Gateway 1 project.

The scheme, which will provide airport-style departure lounges for passengers along with an enlarged station concourse and atrium, new escalators and better pedestrian access, has the support of the Department for Transport, Network Rail and other public agencies.

An alternative scheme favoured by Sir Albert - Gateway 2 - would involve demolishing the Pallasades Shopping Centre, constructing a new retail area and would be dependent on more private sector funding.

Sir Albert said: "My view is that we should not look at this simply as the regeneration of New Street Station but as the regeneration of a much wider area from the Rotunda to the Mailbox.

"There is a suggestion that, by choosing Gateway 1, we are not being ambitious enough."

He pointed out that public sector funding amounting to #200 million was already on the table for the project.

It ought not to be beyond the council's capability to lever in a further #183 million from the private sector and other sources in order to deliver the larger Gateway 2 scheme, he said.

His claims were rejected by council leader Mike Whitby who insisted Gateway 1 had the best chance of securing Government approval and would provide a new station "of which we can all be proud".

Coun Whitby (Con Harborne) added: "We have been ambitious for New Street Station since the 1960s. We are now in 2006.

"In 30 years time we won't be talking about ambition because we will have the New Street Station that we want.

"It is a question of gelling together ambition with what we can deliver. But I can assure you there is no lack of ambition. This will be a world class travel experience."

Coun Whitby said the next step for the council was to persuade bodies such as Advantage West Midlands and the Government Office for the West Midlands to deliver on pledges already made in principle to help fund the new station. The cabinet agreed to allocate a further #1.5 million toward the planning stage.