The scheme, for this vast twisting 250m-high structure on the banks of the Huangpu River, looked set to be built earlier this year but has now been shelved.
Problems hit the scheme this summer when the city's mayor, who had previously backed the project, decided to sell the land that would make up the site.
This U-turn sounds the death knell for the scheme, which had been scheduled to open in time for the city's World Expo in 2010.
If the project, which was engineered by Arup, had won the go-ahead it would have seen the construction of one of the world's biggest observation towers.
The structure would have rotated once every four hours, giving visitors constantly changing views of the city as they travel up the tower's 'legs' in pods.
In addition, the scheme would have incorporated an 'urban entertainment complex' beneath the platform.