Plans to build a new ground for FC United in Newton Heath have been pulled because of funding problems.
It is understood the Manchester United breakaway club, who were due to get a new purpose-built 5,000 seater community stadium on the site, already have their sights set on a new location and still aim to be in a new home for the start of the 2012 season.
The Ten Acres Lane site in Newton Heath – where Manchester United was founded in 1878 - would have been particularly significant to the semi-professional club, who were born out of the anti Glazer movement at the Reds five years ago.
But Manchester council has had to pull £650,000 cash for the project after having millions of pounds slashed from its government funding.
They will now work with the club – which has raised more than £1m for a new ground through a 'community shares' scheme - to find an alternative, more 'financially viable' home.
They said a new proposal, which will be published by the end of the month, would also include community football facilities.
It is hoped the new stadium will also be in Newton Heath at an alternative site.
Andy Walsh, general manager of FC United, said: "This has come as a shock and disappointment to us but we feel confident that the final outcome will be a much stronger proposition for the football club and its supporters.
“We are not abandoning Newton Heath.
“We have worked hard for the residents of the area and engaged closely with them in the work that we have done and while we are sad that we will not be taking forward our proposal to move in to Ten Acres Lane we will continue to work with them in our community outreach programme."
FC United won council backing for the £3.5m development last year. It would have included the renovation of an existing sports centre and artificial football pitches.
The club said it would now be amending the terms of the community shares scheme accordingly.
Eddie Smith, Chief Executive of New East Manchester said: "We have to review these proposals in the light of the funding cuts necessitated by the government's settlement.
“But we remain committed to working closely with the club to examine options for plans which both meet their ambitions and deliver the widest possible community benefits."