The expansion at the Magee branch of the Ulster University is "unrealistic at this stage", Employment and Learning Minister Stephen Farry has insisted.
His comments appear back up his decision earlier this week to delay the £11m development at the Londonderry campus for the "indefinite future".
Mr Farry's surprise announcement infuriated politicians, academics and business leaders alike.
The minister said the expansion was put on hold because the Executive could not reach an agreement on budgets.
Mr Farry, who said his department faces cuts of £34m, has since met representatives from the university, Sinn Fein, the SDLP and the Derry/Londonderry Strategy Board. He said: "I am sympathetic to the potential further expansion of the Magee campus of the University of Ulster.
"However, any expansion of the university sector in terms of student places when we are battling with significant current and future cuts is unrealistic at this stage." Plans for the expansion were granted in July and include 20 classrooms, increased teaching facilities, a lecture theatre and a cafe. Sinn Fein is furious at the decision and held a protest at the Magee campus.