Announcing the move, Michael Gove, the Education Secretary, described the Building Schools for the Future programme as bureaucratic and wasteful, saying that in some cases schools had taken longer to build than an airport in Hong Kong.
He accused the last Labour government of failing to fund the £55 billion scheme, which was due to see new classrooms and other buildings constructed at more than 700 schools.
The announcement came as Danny Alexander, the Chief Secretary to the Treasury, announced a further £1.5 billion in cuts, including £1 billion from the Department of Education.
Labour had been relying on "unrealistic" end of year underspending to fund projects including the school building programme, creating a "black hole" which Mr Gove said the new Coalition Government would not allow to continue.
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