The project aims to attract tourists to the site

The project failed to reach the final funding shortlist for the lottery's Living Landmarks Fund.

The signature project is to sit at the heart of the redevelopment of the Titanic Quarter.

It aims to showcase the city's maritime and industrial heritage and is set to cost an estimated �90m.

This would come from a mix of public and private investment.

Tourism Minister Nigel Dodds said the decision left a large gap and he would now consider other sources for funding.

Titanic Foundation chairman Brian Ambrose said the plan had been well pitched to fund managers and the decision was a setback.

"I think the team did a tremendous job in presenting the project and I'm disappointed we haven't been selected," he said.

"But as far as the project goes we dust ourselves down, we move on and we're still determined to deliver this project on time for the centenary in 2012."

The Living Landmarks Fund is expected to finance up to six projects across the UK.