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Plans to build a multi-million pound sports centre off the Old Thanet Way in Whitstable will not come to light after a disagreement over funding.
Canterbury City Council agreed to put £2 million into the scheme at the Amphenol site near Chestfield McDonald's.
But after a request for more money was made by Active Life - who would have run the leisure centre on behalf of the council - the plans broke down and will not progress further.
The city council was approached by Active Life towards the end of 2014 to act as a guarantor for a loan needed to deliver the project.
Head of commissioned services David Ford said: "Although this was a project to be owned and run entirely by them, we did in fact offer to go beyond the original request and support the scheme by providing a loan at a better rate than Active Life had sourced, thus making the scheme more affordable for them.
"However as the project evolved, it became clear that Active Life would require additional financial support of approximately £400,000 from the council which we had never originally been asked for nor committed to."
Mr Ford explained that all solutions put forward by Active Life would have required the council to lend extra financial support.
But he maintains that the project could still be achieved if Active Life can find funding elsewhere.
He said: "Committing this sort of funding to the project at a time when the council is looking to make significant savings would have put further pressure on the council's budget and is just something we are not in a financial position to do at the moment. Our offer of the loan, however, still stands.
"The council has always been supportive of the Amphenol project but it’s Active Life who have now decided they can't progress any further.
"It is a shame that in exploring solutions to the budget issue, Active Life could not look creatively beyond the council for solutions.”