Key investor Geoff Thomson, of Distinction Hotels, has withdrawn from the approximately $160m development of Invercargill's inner-city block.

On Tuesday afternoon, the Invercargill City Council (ICC) received confirmation Mr Thomson had withdrawn from the development, and would make no further investment.

However, Mr Thompson has offered to leave his previous investments in HWCP for the good of the city and the city block development.

At a meeting on Wednesday, ICC councillors thanked Mr Thomson for his willingness to leave his funding contribution made to date with the project.

According to an ICC media statement, those funds amount to a "significant portion of the $25 million which has previously been reported."

ICC chief executive Clare Hadley said the ICC would work with its partners in the development to seek out further opportunities for contributors to the project.

“The project remains a key part of an inner-city revitalisation, which the community desires and council is committed to.”

Mrs Hadley said the decisions made at Wednesday’s meeting included a resolution that the council would work with the remaining investors to ensure there would be sufficient funding to move the project forward.

“Councillors have also acknowledged that we will need to consult with our community should any further investment by council be proposed," she said.

“That is a commitment council will not fail to realise, and we will keep all stakeholders and the wider community up-to-date as we work to achieve the city’s strategic outcomes.”