The search for a 250,000 sq ft regional office to house the Ministry of Justice has reportedly been put on hold.
Manchester had been competing with other cities for the relocation of the Ministry of Justice which could require up to 300,000 sq ft.
The Ministry of Justice, created in May 2007 out of the merger of the Department of Constitutional Affairs and parts of the Home Office, has decided focus on a more cost-efficient wide-ranging review of its entire estate.
The regional search is thought to be on hold until the election has taken place as the department does not want to be seen to be spending at a time when it is trying to economise on property.
Instead, it will focus on asset management, reconfiguring and sharing space across its different branches, and cutting down on surplus or expensive space in its bases in cities from Leeds to Bristol.
In March, Manchester City Council was amongst the four local authorities being approached by the Office of Government Commerce to put forward consideration sites able to house a 250,000 sq ft headquarters for the Ministry of Justice, along with Birmingham, Leeds and Bristol.
The government pledged to save £1bn on operational property costs in April's Budget and in July appointed the Princess Royal's husband, vice-admiral Tim Laurence, in a new role to champion property asset management.
The appointment demonstrates that the government is realising the importance of asset management as a cost-cutting tool.
The government has long been criticised for its inefficient use of property and it is hoped that the Ministry of Justice review will lead to vast savings. The review could lead to work on rent negotiations and smaller-scale moves throughout the UK.
The aim of the review is to ensure that there is a coherent, top-down strategy for managing the entire estate and bringing together the different branches of the ministry to use property efficiently.
The Ministry of Justice initially wanted a new office fully operational by 2013.