Stockton Council wants to buy up Billingham’s Western Precinct to overhaul its “tired” town centre to deal with high vacancy rates hitting the area.
But efforts suffered a setback when its £20m request to the Government’s Levelling Up Fund was turned down last month.
Council leader Cllr Bob Cook confirmed they would try again next year after Cllr Ted Strike asked about the “disgraceful refusal”.
The Labour leader said: “We must continue to hold the Government to account on the true meaning of levelling up.
“I have written to the Secretary of State to express my absolute disappointment in the Stockton North decision.
“We have requested detailed feedback as to why a pretty strong case for Billingham was ignored.
“We can confirm the council will be applying for the next round of the Levelling Up fund and work is already underway to ensure they’re ready to meet the government’s timescales, which we expect to be around the spring of next year.
“We will ensure we use all the tools and knowledge we have to ensure Billingham has a rock solid case for investment that the government cannot ignore.
“And we will not give up until the people of Stockton and Billingham are heard.”
The decision came after Billingham was not included in the first round of successful bids to the government’s £3.6bn Towns Fund last year.
Organisers of failed bids have been told to “redefine” their applications ahead of future rounds.