Trams have been running in Blackpool for 119 years

Blackpool and Lancashire County councils had wanted to upgrade the ageing track and trams into a rapid light rail system.

Roy Fisher, leader of Blackpool Borough Council, said the rebuff could mean the resort would have no trams in 10 years.

A Department for Transport (DfT) spokesman said the upgrade did not provide sufficient value for money.

'Huge disappointment'

Mr Darling's decision follows his abandonment, announced in Parliament on Tuesday, of new light rail projects for Manchester, Leeds and Southampton.

"Blackpool Council is hugely disappointed with this news as will be Manchester, Leeds, Southampton and others, some of whom had had indicative approvals and have been working on plans for much longer," said Councillor Fisher.

He argued the Blackpool plan had suffered because other schemes had gone over budget.

"The council will not and cannot give up because without major investment Blackpool may have no trams running in 10 years time," he added.

Line extension

A DfT spokesman said it had been a difficult decision but there were other priorities.

Trams first ran in the resort in 1885 and were taken over by the council seven years later.

The resort's tram system runs along the promenade from Blackpool to Fleetwood.

The upgrade would have seen the line extended into St Annes and Thornton.