The city council said that the withdrawal of the retailer meant that the Tithebarn scheme was no longer financially viable.
The scheme secured planning approval from the secretary of state in November 2010 when planning inspectors turned it down on traffic grounds after a public inquiry.
Council leader Peter Rankin said: “We are in the middle of one of the worst economic and financial situations since the 1930s and it is now clear that the large scale comprehensive Tithebarn scheme, that received planning permission as originally proposed, is financially unviable. The world has simply changed and we have to move on and be realistic about what can be achieved.”
Cllr Rankin said that the council was continuing to work with its development partner Lend Lease “to rethink the proposals”.
He said: “We are exploring how best to achieve the city’s ambitions to offer a wider range of quality shopping, more leisure and mixed use of the city centre, including new offices and homes. The opportunity that now presents itself means that we can review all our buildings and assets in a new way. There is strong interest in Preston, both inside and outside the Tithebarn area and we are talking to a number of parties about how we can take the city forward.”
The Preston Tithebarn scheme was first proposed in 2000, as a comprehensive re-development of Preston city centre with new shops, offices, homes and other mixed uses.