A High Court case against a city academy planned for Camden could derail the Government's drive to open hundreds more of the flagship schools, opponents claim.

A solicitor fighting a proposal for an academy sponsored by University College London said today that Schools Secretary Ed Balls failed to follow EU law - and his own department's guidance - by giving the go-ahead to the project in the teeth of opposition from some local residents.

Objectors believe that if their application for judicial review is successful it will force the Government to change the way hundreds of other schools are parcelled out to sponsors, obliging ministers to hold public competitions for each one.

Richard Stein, a partner in solicitors Leigh Day and Co, said: "If public bodies are letting contracts, they should do it in a transparent way and everybody should be allowed to know what is going on."

The dispute started after UCL began negotiating with the Department for Children, Schools and Families and Camden council to sponsor the new school, which would specialise in maths, science and languages, in 2005.

Residents, who wanted a comprehensive and are backed by Labour figures including former health secretary Frank Dobson, claimed the council was wrong to talk to just one potential sponsor.

The residents lost an initial application for judicial review but Mr Stein said two new applications would be presented to the High Court on 17 July. He said in refusing to talk to other potential backers, the council and Mr Balls's department failed to follow its own guidance that all new schools should be the subject of a competition held by the local authority unless there is a "consensus".

The second "challenge" has wider implications for the academies programme as a whole. Mr Stein will urge the court to apply EU legislation which says all government contracts - including for new schools - should be open to bidders from anywhere in the union. Mr Stein said the department's argument-that EU law did not apply was "garbage" and added: "They are in difficulty. This point would derail the whole of their academies programme."

He accused Mr Balls and schools minister Lord Adonis, the architect of the academies scheme, of "Tammany Hall" politics by conducting negotiations with potential sponsors in secret before announcing projects as done deals.

Mr Stein said that if the court agreed that EU procurement law should apply, it would not force the closure of the 83 academies - including 34 in London - that have opened. But it could halt the development of hundreds of others.

Both the schools department and Camden council said they had complied with the law. A department spokesman said: "It is our view that EU procurement law is not engaged when selecting sponsors for an academy."

Andrew Mennear, Camden's executive member for schools, said: "We have taken legal advice at every stage. We are confident that the correct processes of the programme were followed."

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