A clerical error by the Highways Agency means plans to lower the speed limit outside a Herefordshire primary school cannot go ahead.
The speed limit on the A49 through Bridstow outside the primary school was due to be reduced from 60mph to 40mph.
But an oversight in the paperwork means funding cannot be carried over into the new financial year.
Residents have described crossing the road as "dicing with death".
Ruth Haines, who has lived in Bridstow since 1964, said the villagers had fought a long campaign to make the road safer.
"For the sake of a piece of a paper they're putting the children's and parents' lives at risk.
"My children both went to the school and for those that have to cross it is a nightmare, the vehicles don't slow down - it's like dicing with death."
The Highways Agency has apologised for raising expectations.
Jo Carroll, from the Highways Agency, said: "Our contractors were asked to continue preparations before it became apparent that our budget for this financial year had been significantly reduced.
"We are actively seeking additional funding to provide more safety schemes on the A49, south of Hereford."