PLANS to scrap the South West Regional Development Agency under a Conservative Government have been cancelled.

Senior Tories have withdrawn the axe hovering over the quango, tasked with stimulating the region's economy, after previously saying they would shut it down.

In a memo to Conservative MPs the shadow cabinet promised to give council leaders and business people in Gloucestershire the choice over whether they wish to keep the agency.

Mark Coote, the Tories' prospective parliamentary candidate for Cheltenham, welcomed the clarification.

"I think it is a pragmatic response to say let's not throw the baby out with the bath water," he said.

"There are actually many elements of SWRDA that do quite good work, so it should be the case that we recognise that work. There was a commitment to dismantling unnecessary regional tiers of government, of which the South West Regional Assembly and the Regional Spatial Strategy are the main two examples.

"But we should not necessarily apply that to every body."

Shadow local government secretary Caroline Spelman announced last year she planned to scrap RDAs in favour of smaller partnerships formed by councils and business bosses.

In her memo, also signed by former Chancellor Ken Clarke, she says the decision to create the new local bodies or stick with a regional structure will now be left in the hands of local authorities and business leaders.

SWRDA, which has a remit stretching from Gloucestershire to Cornwall, received £260 million from the Government to spend between 2009 and 2011.

The quango has masterminded the successful regeneration of Gloucester Docks, kick-started a major regeneration scheme in Littlecombe, Dursley, and helped to set up and fund the Gloucester Heritage Urban Regeneration Company.

It also owns several business parks across the county and funds the Gloucestershire First support group.

It works closely with the EU to secure funding for projects. And it ploughed more than £8 million into Cornwall's Eden Project during its construction in 2000. But SWRDA has come under fire for being unaccountable to the public and spending thousands of pounds on opening foreign offices.

Cheltenham MP Martin Horwood said he would be glad to see it scrapped. He said: "The Liberal Democrats have already identified regional development agencies as a very likely saving that we could make. I would not be unhappy to see the back of these unelected quangos. It is genuinely difficult to keep track of local power these days."

Michael Ratcliffe, chairman of Cheltenham Chamber of Commerce, added: "Local autonomy is something we would always support.

"It can only be a good thing to have more control over our destiny. We need fewer tiers of regional government."