A project to protect a North Yorkshire market town from flooding has been put on hold because of rising costs.
The scheme involved building flood storage reservoirs near Pickering, which has suffered repeated flooding.
However, the Environment Agency said it was no longer viable within the current budget as the estimated cost had more than doubled from £1.35m to £3.2m.
Flood defence campaigners said the move was "a devastating blow" and the agency should have known the costs involved.
Gordon Clitheroe, chairman of the Pickering Flood Defence Group, said: "I think they should have seen it a mile away. They've been working on the scheme for three years.
"We will carry on the fight to get something done."
The town of Pickering lies at the foot of the North York Moors and last suffered serious flooding in June 2007.
The Environment Agency said the costs of the Pickering reservoir had increased because it was now deemed to be a Category A reservoir, one where loss of life could result if the reservoir failed.
Environment Agency area manager Craig McGarvey said: "This issue, combined with the major engineering challenges of the location due to the proximity of the North Yorkshire Moors Railway, and the nature of the river means that the scheme is not viable within the current budget."
Campaigner Mike Potter, of the Ryedale Flood Research Group, said: "I think it's astounding that they're saying it's because it's classified as a category A reservoir. I was aware of that two years ago.
"Eighty-five thousand cubic metres of water is a lot, especially just above the town.
"As far as I was concerned this was always a category A reservoir and I assumed that was the level the Environment Agency had designed the system to."
Mr McGarvey said: "We have sought advice from a range of experts, discussed the issue with the independent reservoir engineers for nearly a year and used the latest in modelling technology to develop a design that complies with the legislation and could be built within the current budget.
"Unfortunately it has become clear that this is not possible.
"I know it is incredibly disappointing news that building work won't start this year however we will explore ways of how we can make this happen, and we won't rest until we have identified every option."