Tate's plans to turn its warehouse in Mandela Way into a new National Art Collections Centre have been rebuffed by the Heritage Lottery Fund.
The Tate Collection Centre has been situated on Mandela Way for some years and houses hundreds of works of art not on display at Tate's four galleries in Bankside, Millbank, Liverpool and St Ives.
Last year Tate announced that it was teaming up with the National Portrait Gallery to build a £35 million National Art Collections Centre to provide new conservation facilities and enable better access to the nation's art treasures with regular tours and open days.
Grimshaw Architects has designed the proposed building which is much larger than any of the buildings currently in Mandela Way. It is intended that the scheme will include a community garden for the use of local residents.
Tate and the National Portrait Gallery had applied to the Heritage Lottery Fund for a £9.9 million grant towards the project, but last month the application was turned down.
It had been hoped that work could start on the building in 2009 with completion by 2011, but Tate and the NPG now say that they will "review the timing and fundraising options" for the project.
"While we are disappointed not to receive a grant, we are delighted that the HLF found the proposals for a National Art Collections Centre to be excellent," a Tate spokeswoman told this website.
"We remain committed to the vision and objectives of this important national initiative for improving collection care and conservation of the national collections that will also benefit other cultural partners both regionally and nationally."
Last week Tate announced the design and construction team for the planned extension of Tate Modern by architects Herzog & de Meuron. The line-up includes Mace as construction manager and Gardiner & Theobald as project manager.
Tate claims that the extended gallery at Bankside will be Britain's most important new building for culture since the construction of the National Theatre in 1976 and the British Library in 1998.
Work is expected to start on site in mid 2009 and it is hoped that the new building will be completed in time for the London Olympics in 2012.
"We are delighted with the appointments to the Transforming Tate Modern project team," says Tate deputy director Alex Beard.
"We have a world-class team in place and with the recent funding announcement from Government, we are moving successfully into a new phase for the project.