Edinburgh’s scheme to run trams through its historic centre will over-run its £545m budget and face even more delays because of a bitter dispute between the city and the consortium responsible for construction.

Trams are not now expected to run on the 12-mile route from Edinburgh Airport through the city centre to the port of Leith until 2012. The tram scheme was originally due to be completed by 2010 when it was approved by the Scottish parliament three years ago, but the timetable has slipped repeatedly.