Learning centres were planned in seven schools

Elwa, the body responsible for post-16 education in Wales, said it could no longer afford �3m towards the cost of the new �5m units.

The community learning centres would have been introduced in secondary schools to help adults access further education and IT.

However, Elwa said the money was subject to approval and at no time did it give a contractual commitment to funding the project.

Denbighshire County Council secured the additional �2m required for the scheme from European Objective One funding.

Where the centres were planned Rhyl Prestatyn St Asaph Denbigh Ruthin Llangollen Corwen

Council leader Eryl Williams has written to the chair of Elwa, Sheila Drury, to ask for an urgent meeting.

He said he wanted detailed information on the reasons for the decision, and an undertaking that Elwa would fund the costs incurred in good faith by the council in developing the project since last January.

"This is very worrying news about the potential loss of a significant development for north Wales," he said.

"Denbighshire cannot afford it within its own capital resources."

'Appalled'

But in a written statement Elwa said it had not given up hope of finding the money in the future.

"Although Elwa's proposed �3m funding of the project was announced in January 2003, this was done on the widely held understanding that this would only occur if the appropriate funds were available," a spokesman said.

"Elwa has over the last year or so continuously reminded those involved in the project that funding was subject to approval and the availability of resources.

"At no time did Elwa give a contractual commitment to the funding of the project."

Plaid Cymru's education spokeswoman Janet Ryder accused Elwa of "wasteful incompetence".

"I am appalled to learn that after all the proud comments... and all the hard preparatory work done by Denbighshire County Council to develop their schools... [it] has been for nothing," she said.

"This was to have been a ground breaking project that would have become the model for the rest of Wales.

"The sheer magnitude of such wasteful incompetence is mind-boggling.

"We now have the unbelievable situation where many of the 15 projects chosen throughout Wales (including three in north Wales) for learning challenge Fund support, have collapsed," she added.

However, despite being unable to give money to Denbighshire County Council for their learning centres, later on Friday, Elwa announced an additional �4m to spend next year on education.

This would include providing post 16 learning in schools across Wales, including sixth form education.

The biggest rise in funding was awarded to Wrexham where pupil numbers increased by 17% and spending on special educational needs rose by over �352,000.