The project, known as the New Generation Transport (NGT) scheme, would have been the first modern trolleybus network in the UK.
Councillor Judith Blake, leader of Leeds Council, said that while it was a relief to finally get a decision on the project, the length of time it has taken was ‘very frustrating’.
‘Leeds has been let down by successive governments in Whitehall on transport, first Supertram and now with NGT. Each occasion setting public transport in the city back many years,’ she said.
The Department for Transport will still allocate the £173.5m funding to Leeds to improve public transport and air quality in the city.