THE £115m "Kissing Towers" scheme for Leeds city centre has fallen victim to the property slump.
Simons Developments wanted to revise the scheme because the original plan was no longer commercially viable.
But the city council's executive board has decided to terminate the contract.
The site off Sovereign Street, once occupied by the Queens Hall, will now continue to be used for car parking.
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Simons wanted to build a 47-storey tower next to a 27-storey tower and provide 301 apartments, a 161-bed hotel, shops and car parking.
The collapse of the scheme follows soon after the 952-home Lumiere scheme on Wellington Street was put on hold and the 24-storey Spiracle - planned for the International Pool site - was scrapped.
Deputy council leader Andrew Carter, who is in charge of development matters, said the council now had the chance to look at other options for a valuable site.
Mark Newton, development director of Simons Developments, said: "It is unfortunate that due to current market conditions the Criterion Place development is no longer viable.
"The city council in consultation with ourselves and our development partner, Dandara, has decided to terminate the contract for the scheme.
"While we are disappointed, we support the council's decision to do what is economically right for the city at a time of uncertainty.
"We hope that when the market improves, the future of Criterion Place can be re-assessed and the potential of this prime location realised."
Property consultant David Powell of Drivers Jonas of Leeds said confidence was now at an all-time low and more big schemes might be postponed or cancelled.
"This announcement speaks volumes for the current climate in Leeds," he said.
Dr Kevin Grady, director of Leeds Civic Trust, said he believed the Simons scheme would never be built to the original design.
"It was so complicated and costly," he explained. "So this is disappointing but not surprising.
"The council was seduced by stunning architectural drawings. They would have been better advised to appoint a tried and tested local developer."