Controversial plans for a split-site Birmingham library have suffered a serious blow after the Government turned down a request for a financial lifeline.
Culture Secretary Tessa Jowell refused to approve a city council bid for a £55 million Private Finance Initiative.
A PFI contribution would have covered more than a third of the £147 million cost of the new library and Ms Jowell's decision has left the council facing a major funding crisis.
Labour last night claimed the library project was now "dead in the water" and blamed the council's Conservative-Liberal Democrat coalition for insisting on a split-site location - with the lending and reference section at Centenary Square and the archives at Eastside.
The Department for Culture, Media and Sport announced successful library and sports PFI projects across the country at the end of last week.
Six local authorities have been chosen to go forward for funding from the Government and private sector.
They are: Bristol, Worcestershire, Newcastle, Leeds, Liverpool and Wigan councils.
Worcestershire County Council will receive £33.4 million for an integrated public and university library facility.
Coun Ian Ward, deputy leader of Birmingham City Council's Labour group, said the PFI bid would have stood a greater chance of success if the council had stuck with plans for a library at Eastside, designed by Lord Richard Rogers.
Coun Ward (Shard End) added: "Without a PFI contribution, the council's chosen scheme is undeliverable. It is dead in the water.
"It is disappointing but I am not surprised we have not been chosen. The split-site scheme being proposed by the Tories and the Liberal Democrats would never have pressed any of the right buttons as far as the Government was concerned."
Birmingham's Conservative-Lib Dem coalition remains upbeat, despite Ms Jowell's ruling. Other funding avenues are being explored.
A spokeswoman said council-leaders were optimistic that the split-site library would be built.
She added: "Government sources were very encouraging when the project was discussed with them.
"The library is high on the city's list of priorities and there is huge optimism about it remaining in the Government's remit for libraries.
"Opinions are also high about the innovative split-site location that would locate it in the heart of the city while providing an additional presence in the rapidly developing Eastside."
Council leader Mike Whitby said: "We are very encouraged by the project. It is a subject that has caused more than a ripple of excitement in the city and we have always known that it is good for Birmingham."
Projects for PFI funding from 32 local authorities in England were assessed by experts from the Museums, Libraries and Archives Council before being passed to Ms Jowell for a final decision.
Ms Jowell said: " I am particularly impressed by the vision of the chosen projects".