Two weeks after Tesco was refused permission for a new shop in Finchley, Barnet Council says it has been talking to the supermarket giant about the possibility of a new branch on the site of Watling Market in Burnt Oak.

The council refused to let Tesco built one of its Express stores in Ballards Lane, Finchley, a decision endorsed on March 29 by a Government planning inspector. The council successfully argued that a second Tesco in Finchley would have a negative impact on other small businesses in the area.

But this week the council said it was looking at the possibility of a new Tesco in Burnt Oak on a car park in Barnfield Road, behind Burnt Oak Tube station, where Watling Market currently takes place on Saturdays.

With the market floundering - only ten or so stallholders now trade there -the council has said it is looking to relinquish control of the 108-year institution. It has put the market's lease up for tender in the hope a private market operator will take over on an 18-month contract.

A council spokesman said: "This keeps options open while development proposals are being finalised. Early indications are that these proposals will include the reprovision of the market in some form."

The spokesman confirmed the council has been talking to Tesco for more than a year about allowing the supermarket to build on the site.

Tesco's plans, which include residential units, are complicated by the fact the site is on a flood plain. The existing Tesco Metro store in Burnt Oak Broadway - around 500 yards from the Watling Market site - would close.

The council is currently assessing how much the land is worth before entering into further discussions with Tesco.

Another supermarket chain, Lidl, previously agreed a contract with the council to build on the site but pulled out in 2003 because of concerns over flooding.

Mary Dawe, who runs an underwear stall at the market, said she hoped the council relinquishing control of the market may see an upturn in trade.

She said: "The council is not interested and hasn't been for years. If someone new comes in it could be a good thing."

Yesterday the council said it had received no firm offers to take over the market, although interest has been shown by a couple' of parties. They have until next month to make an offer.