The council chose Wates for the Chesterfield Indoor Market Hall job last year with work set to get underway last month.
Wates had already staged “Meet the Buyer” events to put a supply chain in place but has now been dropped from the job after negotiations over price.
The council is now looking for a new contractor in a move which will see refurbishment work on the Grade II building delayed by at least six months.
Andy Hands, Business Manager for Wates Construction, Midlands, said: “We have worked hard with Chesterfield Borough Council to try and bring this project in line with the council’s financial limitations.
“In times of austerity we appreciate the need for tight financial planning, but we were unable to feasibly deliver the project within the budget.
“It is with regret that we will not be delivering Chesterfield Market Hall and we look forward to working with the council in the future.”
Councillor John Burrows, Leader of the Borough Council said: “It’s disappointing that we’ve not been able to accept Wates’ tender, but ultimately we could not reach agreement on price.
“Although a re-tender will mean a six month delay to the project, we believe that by opening the contract up to fresh competition, the Council will be able to get the best possible price for the work.”