The council said the scheme is ‘currently not being progressed’ as the benefits of the bypass would not be enough to attract financial backing from the Department for Transport to take it forward.
However, the council added that it will consider the project in the future and look at other funding options.
The scheme is part of the £200 million Lincolnshire Coastal Highways plan, which included improvements on the route from the A1 up to the North Sea coast.
A bypass at Horncastle, along with a relief road for Skegness and Wragby pedestrian crossing, were proposed by the authority.
But, a report before the authority’s Highways and Transport committee next week said the Horncastle project is ‘currently not being progressed’.
The report added the scheme ‘is included in the council’s pipeline of projects to consider in the future’.
Councillor Richard Davies, executive member for highways at the authority, said the council will consider other sources of funding for the bypass.
Councillor Davies said: “Earlier this year, we carried out an initial assessment of a potential Horncastle bypass.
“Based on the Department for Transport’s scoring system for funding, we found that the benefits this project would bring wouldn’t be enough to attract government money towards the £50 million plus scheme.
“This doesn’t mean that Horncastle will never have a bypass, but it does mean we’ll need to look at other funding options before committing to spending £2-4 million towards moving the scheme forward to the design and business case stage.”
The project was hoped to solve problems with traffic on the A158 through the town which creates ‘bottlenecks’ at peak times.
Local MP, Victoria Atkins, called for the bypass back in 2016 and the scheme was supported by the county council’s economy chief, Councillor Colin Davie.
Meanwhile, the authority said an assessment for a relief road in Skegness as part of the coastal highway were being drawn up and are expected to be complete in the ‘coming months’.
A concept plan for the road was expected to be complete this summer.
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