Plans for the £1bn transformation of Coventry city centre may need to be reconsidered after the government announced that the city's 1950s Retail Market has been awarded Grade II-listed status.

The market, which was built in 1957 and designed by Coventry City Council's (CCC) Architects Department, features a number of East German murals and has been described as an important part of England's architectural heritage by English Heritage. Deborah Porter, heritage protection team leader at English Heritage, said: "The market has all the essential elements of rarity and architectural, technological and historic interest that make it listable, but the interior is particularly remarkable.

"The impressive Socialist Realist-style murals by East-German artists show humans and animals in farming and industrial scenes and are very unusual in England. It was one of the first buildings to have a roof-top car park, and for that reason too it is special." However, the city council expressed disappointment at the government's decision as it now means that the Jerde Partnership's masterplan for the regeneration of the city centre will have to be altered, which had proposed relocating the market site.

Gary Ridley, CCC cabinet member for city development, said: "We built in flexibility within the masterplan so that if we have to keep the market then we can do so in a way that still works. "The Jerde masterplan reflected the historic importance of the market but, critically, it relocated it to a much better position, recognising its role as a true anchor in the city as a place for people to meet and shop."

Plans for the £1bn regeneration of Coventry, which will be the most radical overhaul of the city since the postwar years, includes the creation of rooftop green spaces, open spaces and a waterway following the River Sherboune through the centre of a new shopping centre. An iconic egg-shaped building has also been included in the plans, although the design may alter at a later stage, while the event space at the Coventry Arena has been reduced in size and brought down to precinct level to create a more intimate atmosphere.