Plans to transform Reading's historic Abbey Quarter have been turned down for lottery funding.
The borough council has been unsuccessful in a bid to secure £6.7m from the Heritage Lottery Fund (HLF) to conserve and promote the area.
But it still hopes to obtain reduced funds from the organisation in order to preserve Reading's "civic heart".
The area includes the 12th Century Abbey ruins, the site of Jane Austen's school and Reading Gaol.
Councillors approved the project, which includes repairing the ancient ruins of Reading Abbey, at a cabinet meeting last month.
'Bump in road'
Despite the knock-back, Reading Borough Council is pressing on with what it is calling its "Plan B".
Culture and sport cabinet member, Councillor Marian Livingston, said: "Although we are disappointed about the outcome of our initial bid, we have always had a contingency plan.
"The Abbey Quarter is a heritage site significant not only to Berkshire but to the whole country.
"This is why we will make sure this is only a bump in the road to our target of restoring our beloved heritage."
Council officers hope to meet with the HLF this week to look at prioritising certain aspects of the project, including the Abbey Ruins and Abbey Gateway.