The British Government has shocked the sports world by scrapping plans to hold the 2005 World Athletics Championships in London.

Proposals for a new stadium to host the event at Picketts Lock in north-east London were rejected yesterday because it would have cost nearly £250 million.

Britain could lose the championships altogether unless ministers can persuade the International Amateur Athletic Federation (IAAF) to change the venue to Sheffield.

The World Championships are ranked as the third biggest sporting event after the Olympics and football's World Cup, and the decision could have ended hopes by the British Olympic Association to bid for the 2012 Games.

Culture Secretary Tessa Jowell, Sports Minister Richard Caborn, UK Athletics chief executive David Moorcroft and Government troubleshooter Patrick Carter will meet IAAF president Lamine Diack today to try to persuade him to accept the new plan involving Sheffield's revamped Don Valley Stadium.

The IAAF has indicated that London is the only British city acceptable and have previously said they will re-open the bidding process to other potential host cities around the world.

Caborn said: "It would have cost almost a quarter of a billion pounds to stage it at Picketts Lock and we could not justify that.

"It's an awful lot of tennis rackets, an awful lot of sports coaches and an awful lot of football pitches."

The main reasons for the decision to cancel the project were the cost of improvements to the transport infrastructure, the cost of building the stadium, running costs for the championships, and fears that athletes would not be given acceptable accommodation.