Plans to expand Manchester's tram network have been scrapped, Transport Secretary Alistair Darling has said.
Three new routes were planned in Greater Manchester
The Metrolink extensions were earmarked to go to Oldham and Rochdale, Ashton and south Manchester.
But Mr Darling said the tram networks in Manchester, Leeds and South Hampshire would not go ahead because they were proving too expensive.
Manchester City Council said it was an "appalling decision" and a "major blow" to Greater Manchester.
The joint statement by council leader Richard Leese, chair of the Greater Manchester Passenger Transport Executive (GMPTE), Councillor Roger Jones, and Lord Peter Smith, leader of the Association of Greater Manchester Authorities (AGMA).
It said the announcement "fundamentally fails to recognise the inherent success of Metrolink to date."
"The decision is all the more disappointing at a time when there is increasing evidence that other departments of state are recognising the pivotal role this city region should play in the economic revival of the northern regions, to counterbalance the growth and development of London and the South East."
Mr Darling announced £340m would be given to Transport for London to help improve transport to aid London's 2012 Olympics bid.
Graham Stringer, Labour MP for Manchester Blackley, said the decision would be met with "anger and
disappointment" by residents.
"To stop the scheme at this stage I find, and I am sure virtually everyone in Greater Manchester will find, unacceptable," he said.
Adrian Smith, 24, who commutes daily in to Manchester from Oldham, said he had been looking forward to using the link.
"The traffic from Oldham to Manchester is a nightmare.
"With a local Labour MP (Michael Meacher) and a Labour government supposedly keen on public transport, it never occurred to me that the scheme would be scrapped.
"Why is London getting so much money for transport for the Olympics but Manchester is still waiting for the Metrolink that was promised to us for the Commonwealth Games?"