The Conservatives have called for culture secretary Chris Smith to resign following the Football Association's failure to secure funding for the Wembley Stadium project.

Making a statement in the Commons on Wednesday, Chris Smith said the collapse was "disappointing" and contrary to assurances previously given to the government that everything was on track.

Smith sought to place responsibility for the problems on the Football Association who, through their wholly owned subsidiary Wembley National Stadium Ltd, had responsibility for design and funding issues. WNSL "consistently reassured everyone that all was well - this was not the case" said Smith.

The government learned last week that the project had run into renewed difficulties, revealed Smith, when the FA requested a further £300 million from the government. This was "simply not on" he said.

Peter Ainsworth, shadow culture secretary, told MPs the fiasco was a "humiliation to Britain" and attacked the Chris Smith for his "futile and cowardly" attempts to blame the FA and former WNSL chairman Ken Bates.

The culture secretary had lost the confidence on the sporting world and of the public, Ainsworth claimed. He had "repeatedly proved himself to be an incompetent minister" and should resign, concluded Ainsworth.

William Hague also attacked the government's handling of the stadium planning at prime minister's question time on Wednesday, comparing it to other failures such as the millennium dome and the contract to run the national lottery.

The government should "take responsibility and apologise to the millions of sports fans for the mess they have made," Hague told the prime minister.

Tony Blair responded that Wembley was "not a government project" and noted that the plans had been initiated in 1994 when Hague was a member of the government.

FA chief executive Adam Crozier admitted on Tuesday that the City had failed to be convinced about the viability of the project. Funders were said to be scared off by the spiralling costs of the project which are estimated to have risen to £660 million.

He confirmed that the only money that had been found was £120 million of public money from Sport England.

A working party, chaired by the home secretary Jack Straw, will now investigate options for the project.

East London and Birmingham have been put forward as alternative venues. An East London stadium could form part of an Olympic bid which would also attract European funding.

Birmingham City Council deputy leader, Councillor Andy Howell said that should the Wembley Stadium project fail, the city would be in a position to consider an alternative bid.

"Birmingham and our neighbouring authorities have an excellent track record of delivering major development projects on time and within budget such as Millennium Point opening in September," he added.

"The Midlands has the advantage of being easily accessible with good transport infrastructure already in place. Indeed Birmingham is the perfect site for such a stadium on both planning and business grounds. We will be talking with the government and the Football Association and if there is an opportunity to put Birmingham forward as an alternative site for the National Stadium we are confident that we can put together a strong bid," said Howell.