Entrepreneur Sir James Dyson has been "forced" to scrap plans for a multi-million pound design school.
The millionaire inventor of the dual cyclone bagless vacuum cleaner hoped to open the Dyson School of Design Innovation in Bath.
Sir James, 61, pledged £12.5 million to the project through his charity, the James Dyson Foundation, which was to be joint funded by the Government. But the school, which would have pioneered new ways of teaching design and engineering, was hampered by four years of planning and funding battles.
Most recently opposition from the Environment Agency over flooding fears prompted local government minister Baroness Andrews to call in a planning inquiry.
Sir James said the Government had now rejected his latest funding proposal - the final nail in the school's coffin.
He said: "Faced with a planning inquiry and this Government's recent rejection of our funding proposal, we have no choice but to abandon the plans for the school.
"We deeply regret having to give up on the opportunity to provide an exciting education for our young people."
But he said he was still determined to help young people in design education. He said: "We now intend to find another way to nurture young engineers - this time on our own terms."
Proposals for the school, which could not have accepted students until 2012 at the earliest, focused on providing 14 to 19-year-olds with opportunities to do hands-on engineering projects with industry experts.
Sir James was keen to have the site in Bath because it is the city where he began his engineering career with manufacturer Rotork.
The Sunday Times Rich List put the designer's net worth in 2008 at £1.1 billion.