European funding for a bridge at the site of one of the worst atrocities of the Troubles has been withdrawn.
The Special European Union Programmes Body (SEUPB) had pledged €17.4m towards the Narrow Water project.
However, it withdrew its offer because additional funding had not been found.
Narrow Water was the spot where a convoy of British paratroopers was blown up by a remote control roadside bomb in 1979.
It was the British army's greatest loss of life in one day in Northern Ireland with 18 soldiers killed.
South Down MP Margaret Ritchie said: "I am extremely disappointed that the SEUPB find themselves in this position of withdrawing funding.
"I am still of the belief that the Narrow Water Bridge would be an important economic stimulus for the local area of South Down and Co Louth in terms of job creation, investment and tourism opportunities."
Ms Ritchie also questioned the timing of the announcement, which comes ahead of a meeting on the issue with Northern Ireland's First and Deputy First Ministers at Stormont on Monday.
Louth County Council chairman Declan Breathnach said the decision should focus minds.
"It was not unexpected. They are under severe pressure to spend," he said.
"I think this should focus the minds on what is a shovel ready project and if people really want the bridge to happen, as three local authorities and the majority of public representatives do, then it will focus the minds in the Taoiseach's office and the Northern Ireland executive."
He said he expects the SEUPB will find it difficult to find another project so well developed.
"If there's a will to come up with the shortfall in finance then it has to be a willingness in the NI Executive in connection with the southern Government," he added.
The 195m long Narrow Water cable-stayed bridge has been in the planning for at least five years.
It would have connected Cornamucklagh near Omeath, Co Louth with Narrow Water near Warrenpoint, Co Down, at an historic crossing point.
The entire build would have been 620m long and it had been hoped it could be open by 2015.
Stormont's finance department was the last body to commit to fund the scheme with £2.7m (€3.2m) allocated to the bridge.
In May, Finance Minister Sammy Wilson gave approval for the project on a number of financial conditions and undertakings from both Louth and Newry and Mourne councils.
In July however, council executives in Co Louth pulled out after bids for the job from construction firms came in substantially above budget.
Sinn Féin MLA Caitríona Ruane believes that the project can still go ahead in the near future.
She said what was needed was a commitment for a €6m funding package from the Taoiseach and Department of Transport.
Ms Ruane said party leader Gerry Adams had raised the issue in the Dáil this week and Enda Kenny said he was in support of the project.
"I am disappointed that the Taoiseach's actions did not match his words," she said.
The Government said it remains supportive of the concept of the Narrow Water Bridge and was disappointed the tender process resulted in a much higher price than anticipated.
The Department of Transport, Tourism and Sport said the Government will continue to "pursue the project with the Northern Executive through other mechanisms."