An engineering firm's expansion plans, which would have created 180 jobs, have been halted after the UK government cancelled an £80M loan.

The previous government pledged the cash to Sheffield Forgemasters for the company to build parts for nuclear power stations.

Forgemasters said the plans would have created skilled jobs and the news was a 'huge disappointment'.

The Forgemasters loan is the largest sum awarded to a single organisation to be cancelled by the new government.

Announcing the loan in March, the former Business Secretary Lord Mandelson said it would make Forgemasters one of two plants in the world able to make large forgings for the nuclear energy industry.

Graham Honeyman, Forgemasters' chief executive, said: "Today's government announcement to overturn the loan offered to Sheffield Forgemasters' plans to install a 15kt press is a huge disappointment to all at the company.

"While the press would have placed the company at the forefront of civil nuclear manufacture, it is important for us now to focus on other elements of the company's development.

"The government clearly has a remit to reduce spending and cut the economic deficit and it is for them to decide how best to do that.

"Sheffield Forgemasters will continue to develop its significant involvement into civil nuclear, thermal and hydro power generation markets and seek other ways to develop the business."