Mark Dransfield, who co-chairs the Stocksbridge Towns Fund Board, said the decision to put the town on the list of 101 places sharing the £3.6bn fund despite being rated as a 'low priority' on the Government's own criteria was "political".
He defended the awarding of the funding, which will pay for schemes including a new funicular railway and a transformation of the town centre, as a long overdue investment in an area which has been "given nothing at all in the past".
But his claim that the decision was partly influenced by party politics contradicts the stance of the Government, who insisted the process for choosing successful towns was fair despite claims Ministers targeted marginal seats.
It comes as the Government was criticised over the methodology behind another project, the £4.8bn Levelling Up Fund, after Chancellor Rishi Sunak's North Yorkshire constituency was placed in a higher priority category than Barnsley and Sheffield despite seeing much lower rates of deprivation.
After Stocksbridge was shortlisted in the summer of 2019, Conservative candidate Miriam Cates successfully overturned a 1,322-vote Labour majority to win the seat for the Tories for the first time ever.
Boris Johnson visited Stocksbridge in September 2019 in what Mr Dransfield, who runs a property firm, said was the first visit by a Prime Minister since Harold Wilson in 1964.
He said: "It started as a political thing initially because the Conservatives put a candidate against the Labour Party here in Stocksbridge and she got in, and we had visits from Boris Johnson, and Robert Jenrick and various other people.
"And I think on the strength of that, that's what secured the Towns Fund bid that we took forward, which was amazing."
He added: "We live in a political world. And things happen with politics. What Miriam has done is brought the money here.
"I want what is best for South Yorkshire, not what is best for the Conservative Party or the Labour Party or the Green movement. We want the best for our community.
"And what this has done for the first time in a long time, it's united everybody together, and we've got a purpose and people feel as though they're cared about and they're recognised and it's so important.
"We've started to deliver pride back into our communities now and it's important to continue that journey, it's so important for people to feel proud of where they live."
Asked about Mr Dransfield's claim Mrs Cates, whose profile was raised when she was seated next to Boris Johnson at the 2019 Conservative party conference during a speech by then-Chancellor Sajid Javid, said: "Stocksbridge is a town that has been left behind for decades.
"Despite its proximity to Sheffield, Stocksbridge has not shared in the city’s growth and regeneration, and has received very little attention or investment to help regenerate the economy.
"We were therefore delighted that Stocksbridge was chosen in September 2019 to be one of the 101 towns chosen to receive investment from the Government as part of the Town Deal initiative, a programme that is focussed on improving opportunities and infrastructure in post-industrial towns.
"I am immensely proud of the community effort that has gone into putting our bid together, with representatives from across the town and across different political parties.
"It is a testament to the hard work of everyone involved that our bid has been so successful, being awarded £24.1 million for a range of projects that will help improve opportunities for everyone in Stocksbridge and Deepcar.
"My focus now is on working with everyone locally to deliver our transformative town deal."
Stocksbridge, Brighouse, Todmorden and Morley, all of which were in battleground seats at 2019's General Election, were among the 16 Yorkshire towns invited to bid for up to £25m from the Towns Fund.
The Government says the funding will help local leaders "transform their town’s economic growth prospects with a focus on improved transport, broadband connectivity, skills and culture".
The Yorkshire towns of Castleford, Dewsbury, Doncaster, Goldthorpe, Keighley, Rotherham, Scarborough and Stainforth were selected automatically after being graded as high priority by MHCLG.
Brighouse, Morley, Stocksbridge and Todmorden were chosen despite being rated as 'low-priority' against the Government's criteria.
A National Audit Office report shows 61 of the towns were chosen at the discretion of Ministers led by Robert Jenrick, the housing and communities secretary. An analysis shows that all but one of them were either Conservative-held seats or Tory targets before the election.
Morley, West Yorkshire, another town chosen for the shortlist despite being rated as a low priority, found out last week that it would get £24.3m for its investment plans. A marginal constituency, Morley was won by Conservative Andrea Jenkyns in 2019.
Gerald Jennings, a leading local businessman who became chairman of the Morley Town Deal Board after the shortlisting decision was made, said he had not seen any party politics in the process of putting the bid together.
He said: "If Morley was given the opportunity to bid because there's a Conservative MP, who am I as chair of the board, and who are the good people of Morley to have an issue with that?
"It's there for us to bid, we put forward a very strong bid, and it was accepted by government and the civil servants, there was clearly a very clear scrutiny process around the challenge with the town investment plan.
"It wasn't just a question of 'let's make the bid, and because we've got a Conservative MP it's going to get through'. That was far from the case, there was scrutiny around it, there was challenge around it, and it was made clear to us we had to put to governments a very strong bid. And we did that."