Thousands of people attended last year's event

The annual music festival was meant to kick off the city's 800th birthday celebrations over the August Bank Holiday weekend.

The council said the loss of space at the Pier Head and the amount of construction work going on meant there was a "significant" risk to the public.

The decision has been made in consultation with Merseyside Police.

Increasing number

The council said despite detailed planning for the event, a health and safety review found the lack of space combined with large crowds in an unlicensed environment would pose too much of a risk to the public.

Mike Doran, from the Culture Company, said there had been health and safety concerns since 2002 with increasing numbers of people coming to the event.

"When the city reached saturation point in 2004, the main stage events were moved to the Pier Head," he said.

Council leaders said the decision would not affect their ability to stage other large scale events, including the birthday celebrations on 28 August.

'Wholesale disaster'

The deputy leader of the Labour group on Liverpool City Council, Paul Brant, speaking on BBC Radio Merseyside, said the "buck stopped" with council leader Warren Bradley.

"Frankly I can't see how Warren Bradley can continue as leader of the city council, given that he has responsibility for delivering these programmes, he sits on the relevant boards.

Public safety must come first Colin Hilton, Liverpool City Council

"The buck has to stop with somebody and I can't see how he can continue in his position given the wholesale disaster the city council is now facing," he said."

Liverpool City Council's chief executive Colin Hilton said: "We have been working tirelessly for months to try to make the Mathew Street Festival work in the city centre.

"Unfortunately, it has just not been possible to make it happen this year. We have a responsibility for the safety and welfare of every single person attending the event.

"We are rightly proud of the festival, and were desperate for it to go ahead this year, but public safety must come first."

More than 100,000 people attended on any one day during last year's event, to see acts including Gerry and the Pacemakers, the Royal Philharmonic Orchestra and the Lightning Seeds.