Castle Market stands on the remains of the 16th century Sheffield Castle
An anonymous request for Sheffield's 1960's Castle Market to be listed was rejected by English Heritage.
The decision came as a relief for Sheffield City Council as listing would have restricted major developments in the area.
The long term plan is to demolish Castle Market and move traders to a new site on The Moor.
Demolition would allow the remains of the 12th Century Sheffield Castle to be excavated.
The anonymous request for listing asked for Castle Market to be considered as a 'modern Brutalist' building.
Most of the market buildings in Castlegate date from the 1960s and are constructed from concrete.
There is an office block above the market, and a fish and vegetable market in the middle which dates from the 1930s.
The market lies over the top of the remains of Sheffield Castle.
Sheffield City Council's plans for the area includes removing market traders to a new site on The Moor, demolishing Castle Market, opening up the area for gardens and excavating the remains of the castle.
If the listing application had gone through it would have thrown those plans into disarray.
Giving reasons for rejecting the request for listing, an English Heritage spokesperson said:
"In order to be considered for listing, 20th Century market halls should display a high degree of architectural, technological and historic interest.
"Those post-war market halls which have already been listed have particularly high levels of architectural innovation and artistic achievement which justify the designation of such late buildings. This is not shared by Castle Market in Sheffield. "
Councillor Penny Baker said the decision put the development back on track:
"We're hoping to start building the new markets on The Moor in the New Year. Then we can knock it [Castle Market] down and give the archaeologists some time, possibly a year, to find out what we have underneath there, what remains there are from our historic castle.
"From what we find there we can decide how we can use that heritage to regenerate the whole of that area and enhance our city."
Ambitious plans for a heritage attraction, potentially funded by lottery grants, have not been ruled out but Cllr Baker warned it would take time:
"Perhaps we could do something very adventurous like they've done with Jorvik in York.
"It's going to take a while for the market to be built. The demolition has got to be sensitive and of course when we start digging, there will be things to be seen and we need to set up an area where we can show any finds so that the people of Sheffield can be involved.
"I think the first time anything will be exposed will be a minimum of five years, possibly a bit longer."