Plans for the £200m redevelopment of an inner-city Nottingham neighbourhood have been scrapped after the government decided not to back the scheme.
Nottingham City Council had hoped to transform the Meadows area over the next 25 years.
The council had been promised the Private Finance Initiative funding by the previous government.
The council has already spent £700,000 on the scheme which would have included a new road layout and new housing.
The government has said it will only pay for housing PFI schemes that are already under way.
The city council said it was "a devastating blow for the Meadows" but it will now look for other ways to improve the area.
The Meadows scheme would have included a new shopping centre, traditional street layouts and the remodelling and refurbishment of 1,400 homes.
It was hoped the project would help reduce crime, unemployment and anti-social behaviour.
A spokesperson from the Department for Communities and Local Government said it had "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."