Hopes of a £10 million bid to help Harwich and Jaywick have been dashed.
Tendring Council wanted to apply for Government cash to help the two towns.
However, the Government Office for the Eastern Region has said the Single Regeneration Budget bids could not go ahead but has yet to reveal why.
If the district council had been successful, it would have spent the money developing the Bathside Bay area of Harwich and improving roads and housing in Jaywick.
Les Double, chairman of the council's regeneration committee, said: "We had been given an indication that we would get over the first hurdle with one or the other, or even both, so we are quite disappointed."
For Jaywick the extra cash would have meant better street lighting, roads and housing. In Harwich the Bathside Bay area would have been developed and possibly a new community centre built in the Long Meadows part of the town.
Dave Bolton, vice chairman of the regeneration committee, said: "We are very disappointed but we won't be disillusioned and we will carry on and keep trying."
Jaywick has already received millions of pounds in aid from the Rural Challenge Fund which runs out next year.
However Mr Double said there may still be help for the town in the form of the New Deal for Communities initiative.
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