The mayor is now asking residents what they would like the money to be spent on.
Plans for a new bridge in St Neots is due to be pulled by the combined authority after they have ruled that it would "not offer value for money".
The controversial plans caused a stir with residents who insisted that the bridge was not needed in the town, and that the money could be spent elsewhere.
However, the mayor of Cambridgeshire and Peterborough James Palmer has said that he has now decided that paying for bridge scheme did not offer "value for money" and that he would like to consult with residents to use the £3million elsewhere.
On March 6 a report to the Combined Authority's Transport Committee on the St Neots Foot and Cycle Bridge will confirm that the projected construction costs for the project now exceed the allocated budget and that the benefits of the scheme do not outweigh its costs.
The CPCA will seek now recommendation from the Transport and Infrastructure Committee to the Combined Authority Board that the scheme should not proceed as it no longer meets the requirements for Value for Money set out in the Combined Authority's Assurance Framework.
Mayor Palmer said: "While it is of course disappointing that the costs have risen beyond the initial estimates, making the project no longer good value for money, we have to be mindful of spending public money responsibly. We are very keen to see the current secured funding directed into other aspects of the St Neots Town Masterplan. While the bridge would have been a benefit to the residents of the town, there have been plenty of other superb ideas that will provide equal benefit.
"I am committed to the future prosperity and success of our market towns and St Neots was the pilot for the market town masterplan programme: I am excited to see the great additions to the town that the £3m funding initially earmarked for the bridge can deliver."
However, the leader of Huntingdonshire District Council has said that although it is "disappointing" he hopes the money will help support other initiatives in the town. Councillor Ryan Fuller said: "It is disappointing news that the pedestrian footbridge project is no longer viable and whilst it is of course important that public money is used with best impact, it is of critical importance to ensure that funds already promised for spend on the bridge are not lost to St Neots.
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"I am very keen that monies relating to the bridge project will be protected and made available for alternative measures that best support the future of the town and in ways that will help to leverage additional external funds from such initiatives as the Future High Street Fund that the District Council is working hard to make happen with a bid to Government.
"Huntingdonshire District Council (HDC) remains committed to exploring initiatives that seek to build on the position of St Neots as a key market town in our District and help realise its future growth and economic success for residents, businesses and visitors."
St Neots Town Councillor, Cllr Stephen Ferguson said: " I am surprised and disappointed at the news. Lots of energy, time and money has been invested in the bridge project across multiple consultations, so I'm surprised that the Combined Authority has chosen to cancel the whole project at this late stage.
"I recognise that there was some opposition to the bridge, but there was also significant public support. My own view is that having safe and convenient access for pedestrians and cyclists to our town centre was a critical part of the regeneration plan. Perhaps we can use the money to redevelop the Old Falcon instead"."
The bridge, was planned to be constructed north of the existing towns bridge providing a link to the historic centre of the town from Crosshall Road across Regatta Meadow.
Cllr Steve Count, leader of Cambridgeshire County Council said: "Since March last year we have been working with the Cambridgeshire and Peterborough Combined Authority on the next phase of the St Neots foot and cycle bridge, which has seen the design developed further in preparation for the submission of a planning application for the new bridge.
"The initial estimate for the scheme was up to £6.5m, this was an early estimate while the design was firmed up. A construction feasibility study has recently been completed and suggests that an overall budget of just over £8m may now be needed, which includes a contingency for risks.
"We agree it's clear now the project no longer offers value for money. As this is a joint scheme with the Combined Authority, following the Transport and Infrastructure Committee, we will now take this back to the County Council's Economy and Environment Committee to consider the options available."
The decision to free up the £3 million of funding for other purposes will be taken at the Transport and Infrastructure Committee meeting on March ; there will then be dialogue with local representatives about identifying alternative uses for the funding to benefit the community of St Neots.
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