The Government’s decision to block the scheme, after a planning inspector recommended it should not go ahead, comes a decade after the plug was pulled on Supertram, the last major transport scheme for the city.
Coun Blake said: “It’s a relief to everyone concerned that a decision has finally been made, although the length of time taken to get there has been very frustrating.
“Leeds has been let down by successive Governments in Whitehall on transport, first Supertram and now with NGT. Each occasion setting public transport in the city back many years.
“I’m pleased Leeds will still be allocated the funding and look forward to working with our partners to bring forward the public transport improvements Leeds so desperately needs as quickly as possible.”
But Leeds Conservatives insisted the West Yorkshire Combined Authority and Leeds City Council were to blame for the failure.
Coun Andrew Carter, Conservative group leader on Leeds City Council, said: “I have continuously warned the Council that they were not doing enough to address the concerns of objectors and local campaign groups.
“It was clear to most people that the objectors were well organised, well briefed and knew exactly what they were talking about.
“I am pleased that the Government has made it clear that the £173m ear marked for NGT is still reserved for Leeds.
“The ruling administration now needs to start urgent discussions with the Department for Transport and Transport for the North on comprehensive and joined up proposals for a modern public transport system in Leeds that will command public support.
“The Council and the West Yorkshire Combined Authority have no one but themselves to blame for this. No doubt the administration, as usual, will seek to blame everyone else but that is now par for the course.”
Chris Hearld, north region chairman for major accountancy firm KPMG, said: “There’s no doubt this is a blow for the future economic prosperity of the region. Leeds must be one of the most sizable economic hubs without a city transport network and this decision means it will be without one for another decade.
“Strong transport links support the delivery of economic growth so from a business perspective it is very frustrating to see Leeds condemned to the slow lane when it comes to transport infrastructure.”
Jeff Pearey, lead director at the Leeds office of commercial property firm JLL, said: “With competition between cities becoming more important in shaping the UK economy, an improved and fit for purpose transport network is fundamental to Leeds.
“Investment in NGT could have helped upgrade the city’s transport links. Whilst the news is disappointing, it’s now important the city is not distracted from longer term solutions to ease movement within and across the city.”