Home, the £10m central London nightclub launched by the Scottish club and restaurant tycoon Ron McCulloch, the founder of the Liverpool club Cream, Darren Hughes, and Boyzone's co-manager, John Reynolds, has been shut down by Westminster Council police because of repeated warnings over alleged drug dealing.

Westminster council, acting on the advice of Scotland Yard's clubs and vice unit, revoked the club's public entertainment licence on Friday. The move came after police found evidence of open drug dealing in the club in a series of undercover operations.

The club has been given 21 days to make representations to the council. It is the first time Westminster has used special powers concerning drugs in clubs to revoke an entertainment licence.

Chief Superintendent Simon Humphrey, head of the clubs and vice unit, said: "We will not tolerate the flagrant abuse of the law. Our undercover officers found evidence of open dealing in Category A drugs. They were offered free drugs with the inducement to come back for more."

Ron McCulloch, said: "Effectively, the ruling means that we can no longer have music and dancing at the venue, we can only now open the restaurant part of the club. As far as the future goes, it is not tenable to open as a pub - that's inconceivable. We are taking legal advice as to what the best course of action is."

The club at 1 Leicester Square, London cost £10m and boasts a cybercafe, creperie, five-star restaurant, a members only bar and three different club areas. It has sister clubs in Sydney, Australia and a New York.