PUB giant JD Wetherspoon has been forced to ditch a controversial bid for a large new bar and restaurant in the city centre.

The company, known for its cut-price drinks, sparked local opposition when it announced plans to open a pub on South Bridge. It had applied for a change of use for the building, which was formerly owned by the clothes store Flip.

But bosses have now been sent back to the drawing board after another buyer outbid them for the building. It is now expected to be converted into a delicatessen and cafe.

The news has been welcomed by local business owners and residents, who say there are already too many licensed premises in the area.

Eddie Gershen, a spokesman for JD Wetherspoon, said they were disappointed and were now looking for alternative premises in the city centre. The chain already operates two bars at Edinburgh Airport, the Standing Order on George Street, Lloyds No 1 at the Omni Centre and The Foot of the Walk in Leith. He said: "We were just informed that the owners had sold the site to someone else. We're still very keen to find a site in this area."

The company's chief executive John Hutson has already revealed "three or four" possible sites earmarked in the Capital, and he was hopeful at least one would open next year. They have also applied for planning permission for a pub in Musselburgh on the site of the former Hayweights Bingo Hall.

It is thought that the South Bridge site has been sold to McLeish, a Dundee-based group which already runs four delicatessens in Scotland. It is expected to convert it into a deli and cafe.

Old Town community councillor Bill Cowan today welcomed the news, adding that too many retail units had already been lost in the city centre.

"This was really just going to be a big drinking den," he said. "Wetherspoon sells drink very cheaply and is popular with students, but it's not very good for the town. It's right in the middle of a residential area.

"A delicatessen is the sort of thing we've been trying to promote in the city centre. We need things like this to attract more shoppers."

Paul Waterson of the Scottish Licensed Trade Association said they were concerned that so-called "superpubs" could undercut smaller, established pubs. He said: "We would suggest there is over-provision of pubs already in this area. This is a supermarket style of selling and it's a real problem for the trade.

"These superpubs tend to be run from another part of the country, and because they're so big they can afford to cut prices."

A spokeswoman for the city council confirmed that the original planning application had been withdrawn.