The theatre is all that is left of the original Winter Gardens
Plans to restore a Grade II-listed theatre building in Lancashire have suffered a setback.
The project to restore the Morecambe Winter Gardens theatre missed out on funding from a government programme to regenerate seafront areas.
Campaigners had applied for a £4m grant towards the £12.8m cost of re-opening the historic building.
The Friends of Winter Gardens group is now considering its next move in the bid to get the venue re-opened.
Lancaster City Council applied for the cash in May under the government's Sea Change programme.
But when the projects to receive funding were announced on Monday, the theatre project was not among them.
Evelyn Archer, who has been campaigning to re-open the theatre for 23 years, said the announcement was a "crippling blow".
"I think the main reason is there was no evidence of any financial support from the city council," she told BBC Radio Lancashire.
"Taking on this building was a huge responsibility. We could see the benefits, but it's just a shame the council didn't."
Mrs Archer said the £4m grant would have triggered matched funding from the North West Development Agency (NSWDA), and an application for a further £4.5m from the Heritage Lottery Fund (HLF).
But instead of nearing their total for the theatre's refurbishment, campaigners are back at square one.
However, Mrs Archer remains defiant and said she would not be giving up her campaign.
"I'm not the sort of person [who, after] 23 years of fighting every obstacle that's been put in my way... No, it's not the end.
Stuart Langhorn, leader of Lancaster City Council, said the trust had the council's support.
"The council is committed to Morecambe's continued regeneration and a rejuvenated Winter Gardens has the potential to be yet another catalyst for that.
"We are obviously very disappointed, therefore, that the bid has been rejected.
"The revitalisation of the Winter Gardens is a key part of the council's economic vision and we will be meeting with the Winter Gardens Preservation Trust shortly to discuss the way forward."
The Winter Gardens complex of buildings, which included a ballroom, seawater baths and bars, opened in 1897.
The theatre is now all that is left of the original complex.