Original proposals by developer ING Real Estate including a 90-room hotel, yacht club, restaurants, bars and shops as well as hundreds of new homes secured government support in March 2007.
But construction work has yet to begin, forcing a ruling on the future of the development to take place on June 25.
The council and developer have now said that the recent collapse of the subprime mortgage market in America and the subsequent Northern Rock crisis have both fuelled a slowdown in the UK housing market.
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They also said that when the plan was originally set out, construction costs were lower and market conditions less uncertain; now a revised plan is being put forward by ING.
They want to build 750 new homes to the east of the site first before any work takes place to improve the harbour area or create a commercial centre.
Val Trotter, who chairs a local group of business leaders called Bo'ness Means Business, said: "Members are obviously disappointed about the change to the actual harbour part of the development but we are in business and understand the economic realities of doing business.
"The master plan is relatively unchanged, however, and still offers a huge potential for Bo'ness and the development of our local economy.
"Quite apart from the many housing developments that are being cancelled around Scotland and the damage to the reputation of Bo'ness if the development fails, the development of substantial new homes within walking distance of the town centre will still add a lasting benefit."
The council is currently in the middle of a consultation period which will end on June 20. The final decision will be made by the council on June 25.
If the proposal gets approval ING have agreed to reduce their profit share from 15% to 12%.
(GK/JM)
