The university said it could not raise the money despite already having spent large amounts in preparation for the landmark project called Lanyon II, which was named after the university's 150-year-old red brick main building.

The project was to cost almost £60m and an international competition was held to find a design.

However, the university said it has not raised the money.

Unwilling

It had intended to knock down Fitzwilliam Terrace, a row of listed houses next door to the union - to which there was strong opposition.

The university has bowed to public opinion and said it will not apply to have them destroyed.

But they said that had affected the revenue-raising potential of the new project.

It is understood there would be less space for shop fronts on the main road and retailers were unwilling to go elsewhere in the complex.

The Ulster Architectural Heritage Society said it was pleased the historic buildings had been saved, but said they believed an alternative plan could be designed to make good use of the site.