An £18 million European Union offer to fund the building of a peace and reconciliation centre at a former prison site in Northern Ireland has been withdrawn, it was disclosed.
The money was intended to support a new development to help resolve other conflicts near the jail hospital where IRA hunger striker Bobby Sands died but a European body said the project was no longer viable.
Democratic Unionist first minister Peter Robinson earlier halted planned construction at the Maze/Long Kesh, close to Lisburn, over concerns it could be used to glorify terror and the 30-year republican campaign of violence. Many victims' groups and unionist politicians had expressed opposition.
Sinn Fein said it would be a shrine to peace, accusing the DUP of breaching a key programme of government commitment and plunging the political institutions into crisis.
Republican deputy first minister Martin McGuinness said: "I want to share power but I cannot do it on my own."
The promised European money may now go to other less contentious projects after relations between the powersharing partners deteriorated during a summer of street riots over loyal order parades and protest.
The prison closed in 2000 when inmates from the Troubles were released and unionists and nationalists have renewed long-standing divisions over what to do with it after initially reaching a consensus.
A watchtower, H-block cell and prison hospital where Sands starved to death in a 1981 campaign for political status have been preserved but the Prison Officers' Association (POA) has said the relics should be razed to the ground.
The Maze/Long Kesh Development Corporation has promised 5,000 permanent jobs and the peace centre was seen as the key to unlocking the full jobs and economic potential of the wider 347-acre site.
But IRA victims' relatives, including some whose loved ones died in the Real IRA bombing of Omagh which killed 29 shoppers, objected.
The DUP's U-turn came as unionists accused senior Sinn Fein member Gerry Kelly of celebrating terrorism at an August republican commemoration of two IRA men killed by their own bomb.
Mr Robinson said: "We made it very clear that what was required was to get support across the community and there had to be a broad level of support and of course if at any time that is achieved there are other opportunities for funding but at this stage it is very clear that the Special EU Programmes Body (SEUPB) does not believe it is possible to get it within the period of time necessary."
After talks with Stormont's Office of the First Minister and Deputy First Minister (OFMDFM) the European body said it had decided the project was no longer viable and rescinded the letter of offer.
The SEUPB will now consider the re-allocation of funding to suitable projects, a spokesman added.
Nationalist SDLP member of the devolved assembly Alex Attwood said there was paralysis in the devolved institutions.
"This is a bad day for politics and for the relationship between Northern Ireland's Government and the European Union."
Terence Brannigan, chairman of the Maze Long Kesh Development Corporation, said k ey decisions relating to the centre remained the responsibility of OFMDFM and this particular funding application was a matter for OFMDFM and the SEUPB.
"As a Corporation we continue to be fully committed to securing the regeneration of the Maze Long Kesh site," he added.