European Union bosses have banned Milton Keynes and the UK from competing for the title of European Capital of Culture 2023.
Leeds, Nottingham, Milton Keynes and Dundee were all bidding for the 2023 prize, along with a joint bid from Belfast and Derry.
But they have seen their hopes ended by the European Commission, which has ruled UK entries "will not be possible" due to the Brexit vote.
A letter to the Department for Culture, Media and Sport (DCMS) from Brussels informed UK officials "on grounds of sound and responsible management of human and financial resources, the Commission considers that the selection process should immediately be discontinued".
Last month, DCMS said it was "ready and fully committed" to host the European Capital of Culture in 2023, for which UK cities were competing with rival bids in Hungary.
However, British officials did warn entrants at the launch of the bidding process the title would be "subject to the outcome" of Brexit negotiations, which could affect UK participation.
Responding to the EU's decision on Thursday, the DCMS suggested it could attempt to fight the ruling.
A spokesperson said: "We disagree with the European Commission's stance and are deeply disappointed that it has waited until after UK cities have submitted their final bids before communicating this new position to us.
"The Prime Minister has been clear that while we are leaving the EU, we are not leaving Europe and this has been welcomed by EU leaders.
"We want to continue working with our friends in Europe to promote the long-term economic development of our continent, which may include participating in cultural programmes.
"We remain committed to working with the five UK cities that have submitted bids to help them realise their cultural ambitions and we are in urgent discussions with the Commission on the matter."
The city handed the title of European Capital of Culture is given a €1.5m (£1.3m) prize from Brussels, but it has been estimated the host city can generate many more millions as a result of the award.
Liverpool, which was the last UK city to hold the title in 2008, claimed it saw a return of £750m to the local economy from £170m of spending.
Glasgow was the previous UK host in 1990.
Responding to the decision, Labour's shadow culture secretary Tom Watson said: "The news that the UK has been shunned from this European cultural competition is a great shame for the whole country and particularly for the cities that had put in bids to be the European Capital of Culture in 2023.
"Some cities have already spent up to £500,000 on their bid submissions.
"Being the Capital of Culture had a transformative effect in Glasgow and Liverpool, fuelling regeneration, tourism and community pride.
"That opportunity has now been taken away from the bidding cities.
"The Government must now explain how they intend to ensure that Brexit does not leave us culturally isolated from Europe and how the economic and cultural benefits that accompany the European Capital of Culture will be maintained."
Under new rules, the prize is open to entrants from EU member states as well as candidate and potential members.
Those countries who form the European Economic Area or European Free Trade Association can also compete, subject to conditions.
