Richard Rogers' glass cover for the South Bank Centre slid closer to oblivion last week after the government flatly refused to make a funding exception.
The Arts Council wanted £75 million to push through work on a three-year fast track, but the culture, media and sport department turned down the request, saying 'there was no question of doing that'.
A defiant department spokesman said: 'Chris Smith will not change the rules for this application. It is for the council as a lottery distributor to make a decision in the light of what it knows of its future commitments.'
The Arts Council is disappointed by the decision but insisted it was premature to rule out Lord Rogers' scheme. It is talking with the South Bank Centre about how to take the scheme forward.
The centre has become more frustrated at the council and department's game of shove ha'penny with the £130 million project. Each has passed responsibility to the other since mid-December. A spokeswoman for the South Bank Centre said they had been kept in the dark by both sides. 'People feel a deep sense of frustration as we enter the fourth year of this project with nothing to show,' she said.
The Arts Council nightmare has been worsened by the £50 million lopped off its total lottery money since the introduction of the sixth good cause. This has cut its share from 20 to 16 per cent and put the squeeze on all funding.
Allsopp replaces Thurlow as South Bank architecture head
South Bank University has appointed Kit Allsopp as its new head of architecture, replacing David Thurlow, who becomes a visiting professor. Allsopp, who was named as the new professor of architecture last week, beat a shortlist of five and will move from the University of Manchester as soon as possible.
Head of the urban development and policy school Professor Barry Redding said: 'We feel he has the qualities, experience and character that is appropriate. He's got a lot of energy, is full of enthusiasm, and has a good deal of imagination I hope he can bring to bear.'
Thurlow left because of mountingpressures from his expanding practice, said Redding.