Qatari Diar hope to submit a new planning application this year
Developers of the Chelsea Barracks in west London have withdrawn their planning application.
The firm Qatari Diar had planned to build 552 flats in 17 blocks at the site near the River Thames.
It hopes to put in another planning application after discussions with stakeholders including the Prince's Foundation for the Built Environment.
The Prince of Wales recently criticised architect Lord Rogers' design for the former barracks site.
Clarence House said on Friday it had no comment to make on the withdrawal of the application.
In March the prince told representatives of the Qatari royal family that he preferred an alternative classical design for the site by architect Quinlan Terry, describing the current proposal as "unsuitable".
Qatari Diar is owned by the Qatari Investment Authority, which is headed by the country's prime minister.
"If he wishes to live in an era which no longer exists then that's up to him but whether everybody else has to live in that era I don't know," Lord Rogers said of Prince Charles.
Prince stuck in past, says Rogers
The Chelsea Barracks site was sold by the Ministry of Defence to Project Blue (Guernsey) Limited (PBGL) for £959 million in January 2008. PBGL is owned by Qatari Diar.
A spokesman for PBGL said: "We will continue our extensive consultation process with all our stakeholders, where our focus will be on building a consensus for one of the most important sites in London.
"We acknowledge however that there are differing views from various other quarters."
He added that he anticipated a "masterplan" would be submitted to Westminster City Council for planning consent by the end of 2009.
Councillor Colin Barrow, Westminster City Council's leader, said: "We have been notified of Qatari Diar's intention to withdraw, which we welcome as it will provide a new opportunity to create a scheme which is more sympathetic to its surroundings and reflects the aspirations of local people."
A spokesman for the Prince's Foundation for the Built Environment said it had been invited by Qatari Diar to participate in "a more open process".
He said: "We will work with them to advise on master planning, from our core principle of involving the local community and local stakeholders in the design process."