Regional development agency One NorthEast last night asked for urgent talks with Newcastle City Council after it named the Tyne Brewery site as a possible venue for a Las Vegas-style casino.
The site is listed by the authority as one of five possible locations for the complex, which will also include a major convention centre.
However, the announcement caused concern at ONE, which, along with Newcastle University, holds a one-third stake in the brewery, which is expected to be developed for the Science City project.
The site was bought for £33m of public money when Scottish and Newcastle moved operations out of the city, with a £300m Science Central complex planned.
Last night, a One NorthEast spokesman said: "We will be speaking to Newcastle City Council as a matter of urgency. The former brewery site was specifically bought with our partners at the city council and Newcastle University for the innovative commercialisation of science."
The controversy came just two weeks before the Government's independent advisory panel is due to hold a public inquiry into Newcastle's bid for a super casino licence.
It has brought about a potential clash between two major planks of regeneration policy for the city.
Science City aspires to create 5,000 jobs by 2010, and a further 15,000 by 2015, through the emergence of a series of hi-tech enterprises.
Meanwhile, the council wants the solitary casino licence on offer in the UK so it can commission a developer to provide a money-spinning convention centre in the city.
Civic centre bosses claim that could bring in £63m a year and 1,100 jobs to the city.
The council yesterday confirmed the brewery is on its list of five possible venues. But in a further twist, executive member for regeneration Mike Cookson last night said: "Nobody's mentioned it to me. I would be very surprised if that was used for a casino."
The other four possible venues are to the south of the Metro Radio Arena, at Pottery Lane to the east of the arena, land east of George Street and a site south of St James's Park.
If the city wins the licence, the detail of the project will be decided by an open tendering competition between casino operators. Two more potential developers - arena operators SMG and gaming firm Aspers - declared their interest in the project yesterday. American firms MGM Mirage and the Isle of Capri group have already been in talks over the scheme.
Labour opposition group deputy leader Nick Forbes last night said it would be an "outrage" to use the brewery site for a casino after it had been bought with public money for Science City.
However, he seemed to signal a difference of opinion with group leader John O'Shea by saying Labour members in his Westgate ward - which includes several of the possible sites - were opposed to a casino. Coun O'Shea has previously described it as "a win-win situation".
Odds shorten on Tyneside's chances
NewcastleGateshead Initiative chief executive Andrew Dixon yesterday insisted the city has a great chance of landing the only super casino licence in the UK.
Seven cities are bidding for the licence, with the favourites thought to be Blackpool or London's Millennium Dome site.
But Mr Dixon said: "All the indications are that Newcastle has put in a very thorough and unique bid, and we're the only city that's having an open competition."
Other bids have been put together with a named casino operator already signed up. "If you want to test the regeneration impact, Newcastle's is the bid to back," he added.
The city's bid was boosted this week by two key reports. A majority of residents and city centre visitors backed the proposal in a poll, while resources for tackling problem gambling were commended in a separate study.
A survey including 865 residents and 186 city centre visitors found 51% in favour of the bid, with 38% against.
Responses to a survey of specialist organisations, including health, education and religious bodies, showed 45% in favour with 34% opposed.