The Irish government has pulled out of the A5 road project connecting Derry to Aughnacloy.
It is understood the decision to postpone the commitment to co fund the road was made during a government review of major infrastructure projects.
The Irish government, which was to jointly fund the project with the north’s executive, has already contributed more than £20million to the £800million road.
Only two months ago, the north’s Transport Minister Danny Kennedy wrote to Derry City Council advising of the Irish government’s continued commitment to the A5.
The 88km road, which links Derry to Co Monaghan and onto Dublin is seen as a central tenet to the north west’s economic regeneration.