Manchester officials have said they will consider a legal challenge if a government decision to axe the city's planned super-casino is confirmed.
The super-casino was planned for east Manchester
The city council said it knew nothing of the U-turn by ministers, who are still planning 16 regional casinos.
The BBC has learned that the decision is to be announced in a statement to the Commons after the half-term recess.
The rethink, after a review ordered by Gordon Brown, is outlined in a letter to Scottish and Welsh executives.
Manchester City Council said: "The city council was considering a Judicial Review. We are looking at all the options."
As a parliamentary bill was passed to permit the building of all the casinos, the council could go to the courts if their super-casino is shelved.
Manchester officials have warned in the past that they would legally challenge any U-turn.
Barbara Taylor, a resident of east Manchester who has campaigned for the super-casino, told BBC Radio 5 Live she was angry about Gordon Brown's apparent change of heart.
She said: "What annoys me more than anything is this man came to Manchester, and he actually voted for the casino.
"I just want to know what the government are going to do to put those three thousand jobs back into east Manchester."
The city was a surprise winner when it was chosen as the location of Britain's first Las Vegas-style super-casino.
It was named the preferred site in January 2007 at the expense of Blackpool, whose supporters said it would benefit more.
But in March that year, peers rejected the plan by just three votes, after MPs had backed it by a majority of 24.
The scheme was then put in doubt when Gordon Brown asked Communities Secretary Hazel Blears to carry out a review into other ways to regenerate Manchester.
That prompted concern from senior officials in the city who claimed the team behind the review had not even visited the proposed site of the super-casino in Beswick.
The policy had been backed by former prime minister Tony Blair, who said in May that he thought both Manchester and Blackpool should get super-casinos, if there was sufficient investment.
However, the decision to take the super-casino away from Manchester will effectively be seen as Mr Brown tearing up Mr Blair's plans.
BBC political correspondent Carole Walker said: "Tony Blair was very keen on the idea of a super-casino to regenerate run down areas.
"Gordon Brown made it plain when he took over as prime minister he didn't share that view.
"I think there's going to be some bitter disappointment in Manchester where campaigners had hoped this would bring thousands of jobs to the area and regenerate a rundown part of the city."
Bath and North East Somerset
Dumfries and Galloway
The Department for Culture, Media and Sport (DCMS) insists there is still no decision on the super-casino at this time.
"There is a statutory requirement for the secretary of state to consult Scottish and Welsh ministers before making a decision how to proceed," a spokesman said.
"No final decision will be taken until ministers have had the opportunity to consider the views of Scottish and Welsh ministers."
But Tory shadow culture secretary Jeremy Hunt said: "The government's flip-flops on this have left Manchester's regeneration plans in tatters and the gambling industry in turmoil. Is the government for casinos or against them?
"No-one is left any the wiser by this news. More importantly they have totally failed to address the most critical question, namely how to tackle the rise in problem gambling."
'Change of heart' letter
Don Foster, the Lib Dems culture spokesman, said this showed the government's casino policy was "in disarray".
"Both opposition parties had concerns about the super-casino, but were happy to see the eight small and large casinos go ahead," he said.
"Why did it take such a delay and a further review for the government to concede we were right?"
A Scottish Government spokesman said: "We have received notification from the Department for Culture, Media and Sport of the intention to proceed with eight large and eight small casinos."
He said the 16 local authorities involved across the UK had been notified, but he had no information on the proposed Manchester super-casino.
"The letter merely pointed out that they decided to proceed with the eight large and eight small casinos," he said.
A Welsh Assembly spokesman said: "We have received a letter but we cannot disclose the contents of the letter without the permission of the DCMS."