RED squirrels could force a developer to drop plans to build houses in woodland within the Cairngorms National Park.
An 18-house development and plans for four house plots in Kingussie were due to be discussed by the park authority today, after planning officials recommended refusal.
The authority confirmed yesterday that Davall Developments has now withdrawn i
ts applications for the site in West Terrace.
However, conservationists are still fighting another application, from Allan Munro Construction, for four house plots near St Vincent's Hospital in Kingussie, which planners are recommending for approval despite evidence of squirrels in the area.
A report to today's meeting says the West Terrace site supports or is near to 17 squirrel dreys, many of which are considered to have at least a moderate chance of being used by red squirrels, a Cairngorms priority species.
Officials say the dreys could suffer disturbance, particularly during building work, but the report says the St Vincent's site is less significant, with just five dreys.
A spokesman for Davall said: "The red squirrel issue came along very late in the day and our clients are taking further advice. In the meantime, we felt it best that they withdraw the applications."
The Badenoch and Strathspey Conservation Group has documented more than five dreys on and near St Vincent's and says the area is also used by other species, including pipistrelle bats, hedgehogs, pine martens and roe, red and sika deer
The group has also objected that no survey of insects had been carried out for the site.
Dr Gus Jones, the group's convener, said: "The site makes an important contribution to the amenity of Kingussie, and is notable for its natural unspoilt and inspirational character."
Craig Macadam, conservation officer Scotland for the charity Buglife, said: "Practically every development proposal should at the very least have a baseline invertebrate survey undertaken.
"To proceed with a development without an adequate survey is like stumbling through a minefield with a blindfold on."
There are about 120,000 red squirrels in the UK, with 75 per cent of the population in Scotland. But the animals are under threat from loss of habitat and from their bigger and more numerous cousins, the grey squirrels.
Earlier this month, it was announced that about 20 protective forest strongholds are to be created across the country where the reds can live in safety.
