The proposed A5 dual-carriageway was to run from the border near Aughnacloy through Omagh and Strabane to Derry.
The work was to be funded by the Government and Northern Ireland’s powersharing executive and was part of the St Andrew’s Agreement in 2006.
The expected cost is around £800m and the Government was due to provide 50% of this -at least 21 million euro of tax payers money has already gone in to the project.
In recent months the Fine Gael-led Government had remained committed to the project – however, the news that position had changed came from the North and not Dublin.
Donegal Fianna Fail Deputy Charlie McConologue has reacted with fury to the decision: