Everton Football Club's plan to relocate from Liverpool to a new £400 million stadium and shopping centre have been rejected, sources have said.
The club hoped to move from Goodison Park to a 50,000 seater stadium in Kirkby which would feature a Tesco superstore and shops.
But a club source said the Government had rejected the plans after a public inquiry this year.
It is expected the news will be officially announced on Thursday.
The move was said to bring up to 7,000 jobs to the town, an impoverished suburb of Knowsley. Knowsley Council chiefs were unavailable for comment.
It is thought the main reason behind the Communities and Local Government Department's rejection was that the development might take money away from other Merseyside centres.
A Tesco spokesman said on Wednesday night: "We have not been formally notified yet, but we are expecting to be told in the morning, when we will be able to comment."
An opponent of the move, Ian Morris of the Kirkby Residents' Action Group, said: "That is brilliant, it is fantastic news. The club have a major problem with no new stadium and will have to look at redeveloping Goodison. But our campaign was never about football, but the town we live in.
"We believe the football stadium would have destroyed our town. Kirkby is only a small town and they were talking about a 55,000 seater stadium built right in the town with a huge retail development which we thought was inappropriate. It would have had a major negative effect on the retailers working in the existing town centre. The stadium would have disrupted everybody's lives every time there was a football match."
The Communities and Local Government Department, headed by John Denham, was also unavailable for comment.
