The country hosted a hugely successful start of the Tour de France in 2014 and secured the acceptance of a return visit from the organisers ASO for 2017.
However, despite the green light, London has now backtracked and decided not to support the race after all.
The managing director of the Transport for London (TFL) company, which would have put up the funds, explained the decision.
“To ensure value for money we must make difficult choices,” Leon Daniels told BBC Sport.
“We have always said that the return of the Tour was subject to funding.”
The decision was made last week, just one day before contracts were due to be signed. The news became public Monday when the BBC reported the turn of events.
The British capital was successful ahead of Edinburgh, Manchester plus several German regions. It is not now clear who will be given the chance to take over, but German is heavily tipped to be the destination.
The country experienced considerable Tour success this season, with Andre Greipel winning four stages and Tony Martin and Simon Geschke winning one each.
The 2014 Tour start is regarded as a resounding success, with an estimated four million spectators attending the first two stages in Yorkshire and a reported boost to the local economy of £100 million.
On that occasion TFL contributed £6 million.
The BBC stated that management at TfL and its parent body the Greater London Authority made the decision. The news agency said that the possible upcoming cuts to transport spending in the country may have been a big factor.