Thirsk councillors and residents are incensed that Hambleton District Council has lost the town £25,000 promised for flood prevention.
Yorkshire Forward offered the district council the money two years ago for a scheme to alleviate flooding.
But delays in putting a scheme forward by the February deadline had lost the council the money, said Hambleton and Thirsk town councillor Jan Marshall.
"I understand that Yorkshire Forward has withdrawn the offer. This is ridiculous as the district council told us there would be no problem in preparing a scheme last November but we have not seen it. It has fiddled about so long we have now lost it."
David McGloin, head of technical services at Hambleton District Council explained why Yorkshire Forward had withdrawn the money: "The Thirsk scheme was a complicated one to pursue.
"We learned from Yorkshire Forward that the money had been tied in with a scheme of the internal drainage board's."
A survey for that scheme was held up because of the foot-and-mouth crisis and the plan was not submitted until May last year.
The district council had then started talks with the board and eventually a scheme was put forward to build a flood wall alongside riverside properties, but this was not accepted he said.
"We have been trying very hard to facilitate a scheme in Thirsk. It is very difficult to meet all the criteria set down by Yorkshire Forward.
"Although we have not now got this money it does not mean that we are not going to carry out work in the town. We are preparing a scheme and will present it to the council in April and the district's flood forum in May."
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