Proposals for a tram linking Camden Town with Brixton and Peckham via Waterloo and the Elephant & Castle have been shelved by Transport for London, even though Boris Johnson admits that the scheme has "much merit".
The future of the £1.3 billion scheme has been in the Balance since Boris Johnson took over as Mayor of London in May.
Since then local Labour, Lib Dem and Green politicians have run a cross-party campaign to keep the tram link on the Mayor's agenda.
Despite "positive noises" at a recent summit, Transport for London has now confirmed that the Cross River Tram will not be pursued in the authority's next 10-year business plan.
In his foreword to the business plan, Mr Johnson, who chairs Transport for London, said that the tram has "much merit" but he couldn't justify further expenditure.
"The Cross River Tram, in particular, is not funded and I believe the £19 million we are due to spend on its development would be better spent on improving existing public transport capacity."
A TfL press statement accompanying the business plan confirms the Mayor's conclusions. Given the lack of funding available to implement the project and the likelihood of not securing additional third party funding, TfL is not in a position to develop the scheme any further.
"However the business plan will deliver a number of transport improvements to the communities along the proposed routes including the increased capacity and more frequent services to come on the Northern, Victoria and Piccadilly lines.
"TfL and the London Development Agency will now look at alternatives to Cross River Tram including Northern line separation, improved bus operations and other ways of supporting local regeneration."
At Wednesday night's Southwark council assembly meeting Cllr Paul Noblet – the borough's executive member for regeneration – suggested that Mr Johnson had not been properly briefed on the merits of the Cross River Tram.
Reporting back to councillors on his recent meeting with the Mayor at City Hall, Cllr Noblet said: "One of the things that he was surprised by was that he had not had all of the briefings from his officers giving the case for trams rather than buses."
One of the leading groups in the campaign for the tram has been the Evolution Quarter Residents' Association in Peckham.
"The Cross River Tram would extend London's comprehensive transport network into some of the most deprived communities in the capital," explains chair Phil Bale.
"It is therefore difficult to see why the Mayor is not fighting hard to secure alternative funding for this scheme, instead of trying to walk away from previous commitments. There has been substantial under investment in public transport in south London for far too long and this new transport strategy will do nothing to address this or ensure that there is a fairer distribution of wealth and opportunities across the capital."
Labour London Assembly member Val Shawcross, a long-time champion of the Cross River Tram, says that the Mayor is "making a bonfire of much-needed transport schemes vital the economic regeneration of the city."
"The Mayor's utter lack of commitment to public transport, to encouraging people out of their cars and to investing in London's future have been vividly exposed today. It seems that poorer areas of London and the outer boroughs in most need of public transport links just do not feature in the Mayor's vision. I fear this could be the week in which London's public transport progress ground to a halt."
Lib Dem London Assembly member Caroline Pidgeon also accuses Mr Johnson of a lack of imagination.
"How can a Tory Mayor moan that there is no public sector funding to deliver these projects?" she asks.
"He should instead be looking for private sector funding or support from enterprising business groups. Where is the Mayor's innovation and creative thinking that we were promised?"