The massive redevelopment plan was contentious because half the estate’s 700 households stood to be moved on to create the new campus.
Both UCL and Newham Council confirmed talks have been broken off because they could not agree commercial terms.
UCL provost Malcolm Grant said the university still hoped to find a suitable site in Stratford to build a major second London campus.
“This was an ambitious but extremely complex proposal and the process of intensive and lengthy examination has led us both to conclude that we cannot reach a commercial agreement.
“However, the process has reaffirmed the commitment of both parties to establishing a UCL presence in Stratford,” said Professor Grant.
The project on the 23 acre site was expected to sustain 1,000 construction jobs in Newham over a 11-year period.
The decision is a blow to a clutch of consultants and architects who were jostling for the job to develop the masterplan for the site.
A spokesperson for Newham Council said: “We are disappointed that we were unable to bring UCL to the Carpenters Estate. The council remains supportive of UCL establishing a major presence in Stratford.
“We recognise that this decision will bring further uncertainty for residents of the estate.
“Newham Council remains committed to redeveloping the Carpenters Estate and will now explore other options to take this forward.
“A number of parties have expressed an interest in working with Newham Council to help regenerate the Carpenters Estate.
“These were not pursued while UCL and Newham Council were in exclusive negotiations. We will now reopen discussions with those and other interested parties.”