A £100m bid to transform homes and neighbourhoods in parts of Northampton has been scrapped by the government.
The private finance initiative bid, which brings together private money to fund public projects, aimed to improve 600 homes in Eastfield and Thorplands.
Northampton Borough Council's leader Brian Hoare said it was "deeply disappointing" that the scheme was being scrapped in the Spending Review.
The government said projects already in procurement were given priority.
Liberal Democrat Mr Hoare said: "A great deal of work has had to be done to get to this stage, and so I can't pretend that this news is anything other than deeply disappointing.
"I know the PFI process is complex and difficult and that not everyone has been a supporter of it, but it was a real opportunity for us to make an incredible difference to these two estates."
Sally Beardsworth, Northampton Borough Council's cabinet member for housing, said: "I am totally, totally devastated for the people who live in these areas.
"These are their homes that we were trying to improve. They are my main concern at this moment in time."
Northampton Borough Council was this week writing to residents to let them know what was happening and what this would mean to them.
A spokesman for the Department for Communities and Local Government said: "We continue to support investment for new housing and decent homes through PFI, but also have a responsibility to ensure every pound we spend is spent wisely because of the huge deficit in the public finances.
"Priority has therefore been given to continuing to support projects already in procurement, which is the right thing to do.
"As part of our commitment to improving the country's social housing stock we have announced a £4.5bn investment that will deliver up to 150,000 new affordable homes over the next four years, and over £2bn on tackling non-decent homes."