The sustainable transport group says it is dismayed that Monmouthshire County Council officials still have not advised their planning committee on the application, lodged nine months ago.
As a result part of £50m pledged towards the cycleway project by the Big Lottery Fund ran out of a time limit set for completion.
Jeremy Cowen, spokesman for Wye Valley Communities for Safe Cycling, said: "As a result of these delays the lottery money is frustratingly no longer available as Sustrans cannot feasibly complete the project within the five year funding window.
"This deals a massive blow to the scheme, which has enjoyed overwhelming local support."
But he said there was still "great potential" to make the scheme happen, adding: "Securing planning permission from Monmouthshire County Council is the next step we are eager to see."
In a further move members of Brockweir Cycleway Concern recently applied to the High Court for a judicial review of a Forest of Dean Council planning decision granting permission for the path.
Jeremy Cowen said: "The claimants' application for a judicial review against the Forest Council was submitted at the latest possible opportunity in what appeared to be a cynical attempt to maximise delays to jeopardise the path.
"However, we are delighted to hear that their application has been thrown out by the High Court judge, who awarded costs to the Forest of Dean District Council as defendants. The district council are to be commended for standing up to this challenge to preserve the future prospects of this project, which has so much local support."





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