The extension was designed by Polish-born architect Daniel Libeskind
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The Victoria and Albert Museum has failed in its bid to get a lottery grant to build its controversial Spiral extension, costing £70m.
A museum spokeswoman said the decision by the Heritage Lottery Fund put the whole project in doubt.
The London museum had applied for a grant of £15m to build the extension.
Plans to build the Daniel Libeskind-designed "crumpled" construction in the museum's outside courtyard had faced strong criticism.
Future plans
A V&A statement said: "We are deeply disappointed by this news.
"Britain excels in the field of contemporary design and badly needs a national centre to showcase our creative talents.
"It is a great shame to lose the chance to provide this platform and at the same time to give London an outstanding new building.
"Our trustees will now review the situation in the autumn. However, this decision seriously jeopardises the future of the Spiral."
The spokeswoman for the V&A said the decision did not affect its wider plans for the future of the museum.
They include the £25m Medieval and Renaissance Galleries, which will display the museum's world renowned collections.
Other projects include a new Islamic Gallery which is due to open in 2006.
Meanwhile, the Ashmolean Museum in Oxford, which owns works by artists including Raphael,
Turner and Pissarro, has had a £15m grant set aside for it.
It will help the institution create more than 30
new galleries, doubling the amount of display space.
The award is a stage one grant, which means that the money has been earmarked for the museum, but it must submit a further application to
secure the full grant.