Section 23 of the Small Holdings and Allotments Act 1908 places an obligation on parish councils to provide "a sufficient number of allotments" where demand exists. It is important to note that the 1908 Act does not specify a timescale within which the allotment must be provided.
I presume that the site in question is not and has not been an allotment previously, as there are specific rules for the disposal of allotments. Does your council own any other allotments or any other land that could be made available as allotments? Is it your belief that the potential tenant is genuinely interested in holding an allotment, or simply preventing the sale of the land? If, for example, you offered him an allotment elsewhere, would he take it?
There is a case here for separating the two issues and proceeding with the sale of the land with a commitment to explore options for the provision of allotments, either on existing council-owned land, on newly purchased land or on rented land.