Cornwall Council has been lambasted by its own members after scaling back a scheme to provide a new trail for cyclists, walkers and horse riders.
The council had been awarded £1.25 million by the Department for Environment, Food and Rural Affairs (Defra) for the Tourism and Rural Access in Cornwall (Trac) project in North Cornwall.
It had been earmarked for a new trail along former railway routes at Launceston and Bude and would also have delivered an extra two miles of narrow gauge track, to Egloskerry, for the Launceston Steam Railway.
But the council is now to hand back £500,000 to Defra after agreeing a reduced scheme which will see some of the route moved on to rural roads.
Adam Paynter, Lib-Dem councillor for Launceston North, said: "Cornwall Council was given more than a million pounds to provide the trail. All local councillors supported the idea as it would attract visitors and enable local people to enjoy our wonderful countryside.
"We are bitterly disappointed this project has now been dropped. More than half a million pounds will have to be handed back to the Government and there will be little or nothing to show for all the money already spent."
Alex Folkes, Lib-Dem councillor for Launceston Central, added: "The original project plan was a partnership between the council and Launceston Steam Railway.
"But the council lost the support of the railway and of many local residents when it failed to guarantee to keep the way clear for a possible future railway extension. Cornwall Council didn't listen to local people and failed to understand what was important to them."
Cornwall Council confirmed it had reached an agreement with Defra over the new trail. It said it had informed the department and the steam railway last year that it would no longer be able to deliver both aspects of the project. It will now remodel its proposals for the Bude trail and provide a revised proposal for Launceston. The plans for Caradon Hill will remain the same.
Councillor Bert Biscoe, Cornwall Council portfolio holder for Highways, Transportation and Environment, said: "I regret that expectations have been raised in terms of the Launceston Steam Railway, but much work has been done to inform a future project and Cornwall Council will, as ever, provide professional assistance to form a fresh approach."