Developer Multiplex has withdrawn from the £200 million regeneration - which was due to be worked up for planning by Piers Gough's practice CZWG - citing problems with the design.
The loss of a major player is a big setback to the plan to redevelop Barnsley market, which has been put on hold until July while its developer undertakes a desperate search for a last-minute funding partner.
Gough said: 'Multiplex couldn't resolve the structure of the development agreement with the others in the 1249 Regeneration Partnership. We are due to meet with the landowners Barnsley City Council and Yorkshire Forward after the development partnership is reformed.'
Late last week Multiplex deputy managing director Ross McDiven said the decision to withdraw from the project was due to the results of lengthy due-diligence processes. He said: 'The current joint-venture partners' vision for the project was inconsistent with Multiplex's preferred design parameters and would not meet the development division's risk-return hurdles.'
The developer claims it felt overstretched after its commitments had been dramatically ramped up by its takeover of Chelsfield late last year.
David Kennedy, director of development at Barnsley City Council, said: 'We weren't in the same position with the developer after the takeover as before. Negotiating with someone who's taken on lots of other commitments was a bit of a risk.'
Will Alsop, who was commissioned by the local council and Yorkshire Forward to create the vision and masterplan for the town in 2001, said: 'I think it's very sad, but I believe that there's a splendid opportunity in the middle of Barnsley.'
Other members of the 1249 Regeneration Partnership, developers Ashcroft and the Guildhouse Group, were unavailable for comment.