The leader of Liverpool City Council has written to the Prime Minister withdrawing its involvement from his "big society" plans.
The city was one of four pilot areas for the scheme, aimed at giving community groups and volunteers more control over their local services.
But council Leader Joe Anderson said government cuts have threatened the future of many local volunteer groups.
He has now told David Cameron he can no longer support the initiative.
When he announced the "big society" in Liverpool last July, Mr Cameron said community groups should be able to run post offices, libraries, transport services and shape housing projects.
The concept would be a "big advance for people power", he said.
While reducing the budget deficit was his "duty", the prime minister said giving individuals and communities more control over their destinies was what excited him and was something that had underpinned his philosophy since he became Conservative leader in 2005.
Joe Anderson said Liverpool was 'very much committed' to working with community groups
Merseyside television producer Phil Redmond has already attacked the "big society" idea, saying it has been undermined by public spending cuts.
The Brookside creator had originally been a fan of the concept, taking charge of a project involving volunteering and cultural activities in Liverpool.
Joe Anderson said in his letter: "You will recall that you announced Liverpool as one of four "big society" vanguard areas last summer with Phil Redmond leading the initiative.
"Later in the year, Liverpool City Council was asked to assist in this initiative around some key projects, including running a 'parallel vanguard programme'.
"We took up this challenge wholeheartedly and have invested significant resources to deliver this substantial programme of activity."
However, he said the government promised to work with the council to "remove some of the problems and blockages" that were preventing them from making the programme work.
He said the government had failed to deliver any of the changes the council asked for.
Mr Anderson, who is leader of the Labour Party in Liverpool, said: "Liverpool has been doing the "big society" for many years. We call it 'working with our communities' and it is something we are very much committed to."
But he said the loss of more than £100m of Area Based Grants to Liverpool has put many organisations at risk.
"How can the city council support the big society and its aim to help communities do more for themselves when we will have to cut the lifeline to hundreds of these vital and worthwhile groups?," he said.
"I have therefore come to the conclusion that Liverpool City Council can no longer support the big society initiative, as a direct consequence of your funding decisions."
http://www.bbc.co.uk/news/uk-england-me ... e-12357450