The contracting group, which runs well-known brands like Allenbuild, Britannia and Walter Lilly, said redundancies and restructuring would cost £3.5m.

Its withdrawal will reduce 2012 building revenue by approximately £60m but not impact on group profits because trading has proved so tough in the region.

The group said it would still bid for specialist engineering work with energy, rail and environmental customers in the region.

It is hoped specialist engineering will be the power house for future growth across the group, contributing 80% of profits next year.

Renew, which bought Barnsley engineering business Amco Group for £19.8m last month, said its presence in the non-specialist and discretionary public spending building markets is “unable to provide acceptable and sustainable returns at an appropriate balance between risk and opportunity”.

In a trading update the firm said: “Going forward, Renew’s specialist building activity will be based in the south.

“Contract selectivity will remain the guiding principle with our focus being on the robust new build social housing, high quality residential and retail markets.

“Our business in these sectors is well secured with good forward visibility.”

Renew expected the phased pullout as contracts finish will be achieved by September. The exception will be its £44m Kirklees Waterfront Campus Project which is proceeding well and is planned to complete in July 2012.