Alf and Kath Overy offered their Grade Two listed Old Parsonage home, worth £650,000 and set on the banks of the River Ouse, as part of a competition which people could enter for £60.

The couple aimed to pay off their debts and donate £250,000 to The International League for the Protection of Horses with the proceeds but claim their plan was sabotaged by PayPal after it stopped taking payments.

As a result they are preparing to sue PayPal for £750,000 at the specialist Leeds Mercantile and Technology and Construction court.

Mr Overy said they had failed to negotiate a deal with Paypal and added: "The draft court order has been prepared and it is ready to go as soon as I get the funds in place.

"We should have taken a million and a quarter pounds plus a large sum for our charity.

"We have a strong case but the hardest point is trying to prove our actual loss because we can't say for certain."

PayPal originally verified a Business Pro account for Mr Overy in February 2007 and the first payment was taken on March 30, 2007, before a ten-week PR campaign started in April, which appeared on national television and radio stations.

But it stopped taking payments and froze the money in the account 'due to a high and unusual level of activity', which occurred as a result of the publicity with 40-50,000 hits received on the competition website after an interview on the Chris Evans Radio 2 show.

Mr Overy revealed that in two days 1,300 payments came in from all over the world including America, Australia and even Taiwan.

As a result all the PR and advertising had to be cancelled and it took four weeks before the Charity Technical Trust set up another payment system.

Soon after PayPal decided that the site was all above board and reinstated the account, but by then it was too late.

The eventual winner, Mrs H Hassan from Newcastle-upon-Tyne, received £50,000 instead of £500,000 and the ILPH only £14,900 instead of £250,000.

Mr Overy added that he is still trying to sell their property and have two people interested.