Plans to have trams running through the streets of Leeds have been turned down by the government.
It was claimed only trams could relieve Leeds's traffic congestion
The Department for Transport's decision has angered civic leaders who claim Leeds is the largest city in Europe without an underground or tram system.
Building of the tracks had been on hold while ministers assessed whether the scheme was value for money.
They now say that Leeds should spend money on more frequent bus services using new vehicles.
Transport Secretary Alistair Darling said: "It is clear that the tram scheme is still very expensive and the costs remain much higher than originally planned.
"The value today is £486m - compared with the approved figure in 2001 of £355m.
"Clearly it does not represent the best value for money for the people of Leeds or the best use of public money."
The decision to turn down the Supertram has been attacked by the deputy leader of Leeds City Council, Andrew Carter.
"This government has let down the people of Leeds and this council in a way that no government has ever let down an area of the country before," he said.
"It was they who encouraged us to move ahead with Supertram, it was them who put £350m on the table and it is them who have destroyed the scheme.
"I know that there are people who do not support the Supertram scheme.
"However, everybody in Leeds should unite in saying that the delays caused by the government are absolutely unforgivable."
If the scheme had gone ahead, construction would have started in 2008 with the first trams running in 2011.
Eventually there would have been three lines, serving the east, south and north of the city.