Up to 70,000 people were expected to attend the annual festival in Roundhay Park next Saturday.

Leeds Mela Management Committee said the event was called off due to a lack of sponsorship and interest from traders.

Ashwain Rayt, vice-chairman of the management committee, told the YEP: "We have been working very hard to attract our usual sponsors and left it as late as possible before making the decision.

"We can only think the lack of support is down to the credit crunch and traders worried about rising costs.

"Traders selling food and things like clothing and jewellery are the bread and butter of the event. But nearly every trader we have spoken to is worried about rising costs."

The Leeds Mela, the city's annual cultural celebration, has run on the first weekend in August from 1996 up to 2006.

Last year it was replaced by Bollywood in the Park, launched to tie in with the region hosting the Bollywood Awards.

The Leeds Mela is one of the biggest events of its kind in the country. Major sponsors of the event in past years have included O2 and the RAF.

Mr Rayt said the committee were having difficult even attracting much smaller organisations, but added that he was confident next year's Mela would go ahead as usual.

He said: "We have started putting plans in place to make sure there are no problems next year. We continue to have full backing from Leeds City Council. Their support has been second to none."

Last year's Bollywood in the Park organisers came under fire after visitors were charged entry fees to fund appearances from Bollywood stars.

A total of up to 50,000 visitors flocked to the two-day event at Roundhay Park, where they were charged £3 admission on Saturday, £5 on Sunday and £5 to park.

Organisers refused to reveal how much Bollywood stars were paid to appear but admitted it was a "substantial" amount.

The festival replaced the Leeds Mela and was brought forward to coincide with the International Indian Film Academy Awards.