Developers involved in the revamp of Leegomery district centre have pulled out of controversial plans to build 71 homes as part of it.
Redrow was in a deal with Telford & Wrekin Council to build five shops, 71 homes and a day centre for the charity Listen & Care.
Telford & Wrekin Council says it is still looking at ways to deliver the shops element.
The centre was virtually gutted by fire in 2005, since when residents have had no supermarket or post office.
They were strongly critical of the council introducing houses and flats into its rebuild and are unlikely to be upset by the new move.
A spokesman for Telford & Wrekin said: “There has been a contractual issue which - combined with the downturn in the residential market and the current wider economic downturn - has halted the planned development.
“There are options available to us and we will now investigate these as a matter of urgency to see if the council itself can deliver the shopping centre on behalf of the local community.”
By Janine Griffiths