Mary Markham, leader of Northampton Borough Council is set to resign from the post after disagreements with colleagues over the future of a pub.
Councillor Markham (Con, Park) disagreed with cabinet colleagues over the future of the Barn Owl pub on Rectory Farm and said she could not act as leader when she believed the cabinet may open itself to losing £200,000 of taxpayers' money.
The pub's owner has submitted an application to convert the site into a Coop convenience store, but it was discovered that a covenant on the site would prevent that unless a payment of around £30,000 was made to the borough council.
The authority has not yet made a decision on whether to accept the buy-out of the covenant, but resident from Rectory Farm have campaigned against the convenience store plan.
Speaking to the Chronicle and Echo Cllr Markham said: "I decided to resign as leader of the council because my main priority is to protect the public purse.
"If we as a council exercised the covenant [blocking the change to a convenience store] the owners of the building said they would make a legal challenge. I sought legal advice and was told the covenant would not stand up in court.
"The deal we had allowed the firm to buy out the covenant and it would mean the upstairs room in the building would be a community asset for the residents to do with as they wished, such as hiring it out for community groups. But it seems they did not back this.
"The covenant dates back to the heyday of public housing and says the building can only be used as a pub. The Barn Owl pub closed because it was no longer viable as a business, as have many of the other pubs built on the old council estates in that area of town.
"Legal advice said a challenge to the covenant could cost the borough council between £50,000 and £100,000, and the owners could also claim loss of earnings which could push the figure to £200,000. That's taxpayers' money we would be losing.
"Since I became leader I have been trying to find out what happened to the £10.25 million loan for the Cobblers stadium project. We are also facing a tough financial position in terms of cuts from Government. I did not feel able to support action that could cost us more money.
"The cabinet will be presented with a paper asking them to allow the owners of the building to buy out the covenant. At a pre-meeting of cabinet members on Friday the majority of members said they would vote to exercise the covenant.
"I urged them to consider the potential costs that could open the council up to.
"As leader the buck stops with me. I would not be able to stand up in front of the public in 12 months time and explain how we had lost £100,000 to £200,000 and say I never wanted to do it in the first place so I decided to step down as leader."
Cllr Markham will formally resign as leader on Monday. She will continue to sit as a councillor for the Park ward. A process will then start among the Conservative group to elect a new leader for them and the council. Cllr Jonathan Nunn (Con, Nene Valley), deputy leader, will be acting leader until then.