Supermarket giant Tesco has won its fight to slash £300,000 from a £3 million pot earmarked for the development of a Birmingham playing fields.

The cut was approved by Birmingham City Council members in a last-ditch bid to get building work started on the Swan Centre at Yardley.

The firm, which last month announced half-year profits of £1.8 billion, will take about an acre of the Oaklands Recreation Ground as part of the scheme.

In return, Tesco agreed to provide £3 million for the redevelopment of the playing fields.

But, with the scheme mired in delays, the company demanded the right to waive eight years of interest on the cash and to delay payment of the rest until after the new store had opened.

Now members of the council have narrowly agreed to Tesco’s proposal in a bid to kick-start the Swan Centre scheme. It was approved in 2002 but a compulsory purchase legal dispute with businessman Jeremy Knight-Adams has held up the construction.

Coun Daphne Gaved (Lib Dem, South Yardley) said: “Residents have supported Tesco all the way, but they are fed up with having an important landmark blighted with the giant pile of rubble.” But Coun Ian Ward (Lab, Shard End) said: When the agreement was signed, Tesco was aware of the compulsory purchase issues and knew the risk.”

Tesco corporate affairs manager Tony Fletcher said: “Since 2002 when the original permission was issued, the costs of the project have escalated. There has also been undue delay in getting on site, due mainly to the need to wait for the decision on the compulsory purchase order. We remain committed to building a new store in Yardley, creating employment opportunities and delivering the package of planning gain.

Mr Fletcher said construction work would begin within weeks. The store is expected to open in spring 2012.