Hopes of a new bypass around four villages on the A12 between Wickham Market and Saxmundham have received an apparently fatal blow after the government said it could not support the proposal.
The Department of Transport has told Suffolk County Council that it cannot back the £133m project - officially known as the Suffolk Energy Gateway (SEGway) for three main reasons.
It is concerned about the overall value for money of the project, it felt the council had not provided enough money for it and neither has EDF as part of the case to build Sizewell C, and there are concerns about the environmental impact of the road.
The Department has said it might consider supporting a two-village bypass instead - but the county would have to demonstrate a greater level of financial support.
The council said that EDF Energy had already pledged in principle funding towards the development while Suffolk County Council had committed to underwrite £6.7m.
County council leader Matthew Hicks said: "It is incredibly disappointing that the DFT will not commit funding to the SEGWay project, which would support many of the energy projects planned for the east coast and leave a strong legacy in Suffolk for its residents and businesses.
"We will continue to look for additional funding, including working with our MPs to have more conversations with Government. Our clear aim is to secure the money we need to deliver SEGWay."
Suffolk MPs Dr Therese Coffey, Dr Dan Poulter - who share the four villages between them - and Peter Aldous have all been lobbying the Department to try to get financial support for the new road.
Mr Aldous said he was a "junior partner" in the discussion because the road would not have been in his constituency - but it would have made a big difference to his constituents.
"I am disappointed by this news, but we have to keep on talking to the Department of Transport to look at other ways of improving road and rail links in the area," he said.
A DfT spokeswoman said: "The government must ensure taxpayers' money is spent effectively. The Suffolk Energy Gateway Project did not provide sufficient value for money and the level of investment from industry and the county council was too low to secure funding.
"The Department for Transport will work with the Council if it develops a revised proposal. This would have to represent better value for money and include a larger financial contribution from the council and industry."
Mr Hicks added: "We have already been very clear with EDF Energy and Network Rail regarding the importance of using rail during the construction of Sizewell C. These talks continue.
"Clearly this funding situation means that should road improvements not go ahead, the need to move Sizewell C construction materials by rail is essential. I would argue that both approaches are needed.
"We want to see stronger commitments from EDF regarding their solutions to protect residents from the impacts of Sizewell C construction."
Labour group leader Sarah Adams said: "The Department for Transport were clearly concerned about the local commitment to a four-village bypass and who can be surprised when just 5% of the total cost was covered by Suffolk County Council? Paying lip service on major developments like this is simply isn't good enough.
"I'm sure there will be plenty of finger pointing within the Conservative group about who is to blame for yet another fiasco, but while they argue, the residents of Suffolk will continue to pay the price for their systemic failure."
Local county councillor Stephen Burroughes said: "This is devastating news for the villages. It is another blow for east Suffolk - we could get a £15bn power station built here but they won't commit to a new road to reach it!
A spokeswoman for EDF Energy said: "While we consulted on rail and road led strategies for Sizewell C we were clear that a mixture of both would be required. This is complemented by our proposals for a construction site accommodation campus and park and ride facilities to keep our workers off local roads.
"Suffolk is aware that EDF Energy may contribute to the Suffolk Energy Gateway project providing the project is delivered within the construction timeframe for Sizewell C."
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