Plans for a giant postcard of the A550 in Flintshire have failed to make a shortlist for lottery funding.
A petition appeared on the Downing Street website opposing the artwork
Landmarks Wales wanted to create three iconic gateway artworks, including the giant postcard. It is now to discuss alternatives for the £13.5m funding.
However, a £25m arts centre in Llanelli is still in the running for a share of a £140m pot.
The Works is the only Welsh bid to make a shortlist for the Lottery's Living Landmarks fund.
The Big Lottery Fund has whittled 23 bids announced earlier this year down to nine.
Plans to restore the Newport to Cwmbran canal also failed to make the final list.
The Works would include a 500-seat auditorium, a smaller studio-theatre, dance and rehearsal spaces and a partly covered piazza leading to outdoor performance areas near Llanelli's Coastal Park.
The Works would be built on land near Llanelli's Coastal Park
Mark James, chief-executive of Carmarthenshire Council, which is behind the bid, said: "We are delighted that this fantastic project is still in the running.
"The project aims to create a creative and cultural centre for communities across Carmarthenshire and forms part of an ambitious regeneration initiative in Llanelli."
The public artworks scheme was put forward by Landmark Wales - a partnership of seven local authorities.
The 'icon' postcard, on the A550 in Flintshire, provoked a petition from objectors on the Downing Street website.
Anna Liu, of London-based architects Tonkin Liu said when the design was revealed that it would be made of a transparent woven fabric, that would allow light to flow through.
Inside, there would be enough room for facilities such as a bookshop.
The other gateway icons were a cloud of 300 flying red figures, suspended on poles near the second Severn Crossing and three granite pillars at Holyhead harbour
Peter Cole, chairman of the Landmark Wales Steering Group, said: "Although obviously disappointed, the partners in this ambitious and transformational project are grateful for the support received from Big Lottery to develop Landmark Wales over the last 18 months."
He said the project had generated "substantial media interest, phenomenal public feedback and support".
"The steering group will be meeting soon to discuss how Landmark Wales can now best be taken forward through alternative funding routes."