In a major embarrassment to the UK government, ministers failed to convince International Association of Athletics Federations (IAAF) chiefs the event should remain in the UK following the collapse of the proposed 43,000-seater Picketts Lock stadium in north London.
The government had hoped to persuade IAAF president Lamine Diack to allow the championships to be staged in the city of Sheffield, north-east England.
The bidding process for the 2005 event will now reopen, clearing the way for Berlin, Sydney, Budapest and Stuttgart to compete to hold the championships.
It also casts a huge shadow over any hopes of the UK staging a realistic bid for the 2012 Olympic Games.
The UK has been axed as host of the 2005 World Athletic Championships in the wake of the Picketts Lock debacle - with the sport’s governing body re-opening the bidding process.
