There was fury after it emerged that Street and Glastonbury will not receive £140,000 from retail giant Tesco as they prepare to build a new store in the town.

Tesco were recently given permission to build a 25,000sq ft store in Glastonbury.

The multi-million pound supermarket had previously been given permission for a 40,000sq ft store, but withdrew the plans after they were called in by the Secretary of State.

With the original application for the larger store, Tesco had pledged to give £70,000 to both Street and Glastonbury to lessen the impact the development would have on the town.

But the planning application for the smaller store – passed by Mendip District Council's planning board earlier this month – did not have a financial offer attached to it.

Its only condition was that if the planning committee passed the application, the Tesco Metro store in Street would remain open for at least five years.

In comparison, the town of Wigton in Cumbria was granted £400,000 from Tesco as part of proposals to build a 30,000sq ft superstore in the town.

The £70,000 that formed part of the withdrawn agreement for the Glastonbury shop could have funded three youth workers for a year, or covered the £56,786 costs to cover the running costs of Glastonbury Library for 12 months – without a reduction in opening hours.

Tesco reported profits of £3.8bn for 2010/11.

A spokeswoman for Mendip District Council confirmed the only condition to the approval for the new store was keeping Tesco in Street open.

"It was felt that this would help to ensure that any potential impacts of the new store on Street High Street are minimised," she said.

A spokesman for Tesco declined to comment.

At a meeting of Glastonbury Town Council meeting last week, district councillor Nick Cottle said he was furious there had been no financial part to the Section 106 agreement. A Section 106 agreement legally commits a developer to spending on community improvements, in return for final planning permission.

Councillor John Brunsdon said the officer dealing with the application had felt that as Tesco had worked hard to take the communities wishes into consideration there had been "no need to penalise them".

But Mr Cottle – who voted against the new Tesco store when it went before the planning board – was furious, saying: "It's not about penalising the developer, it's about making sure the infrastructure of the town can deal with the development. The officer dealing with the case should be sacked."

Mr Brunsdon responded, saying that by giving planning permission for the supermarket, Avalon Plastics, who had been poised to move to South Wales, would remain in the town.

"If that had happened, this town would have lost out very badly," he said. "That is worth more than any amount of 106 money."

But as news filtered through, residents of Glastonbury took to the web to voice their disgust.

Former town councillor Linda Hull described the situation as "outrageous" on an internet discussion forum.

Rik Cook, landlord at Tor Sport and Leisure Centre, called the move "unforgivable" and "disgustingly incompetent".

"I simply can't believe a significant, one off 106 opportunity has been missed and mishandled, especially having previously agreed £140,000 in total," he said.

"It equates to the amount of money that was secured in funding for Frome and Street play parks."

Street Parish Council had hoped the Section 106 money could have been put towards a scheme to enhance the High Street.

"As I understand it, the money was attached to the original application," Councillor Lloyd Hughes of Street Parish Council said.

"Because the store was smaller, it wasn't felt it would have such a big impact on Street as the larger store would have, so the money wasn't attached to the offer."