Everton have been sent back to the drawing board after their proposal to build a new 50-000-seater stadium in Kirkby was rejected following a public inquiry.
The Toffees had hoped to be given the green light on the £400million stadium and shopping centre partnership with Tesco as they moved closer to leaving their historic Goodison Park home.
However, following a four-month public inquiry, Communities and Local Government Secretary John Denham has rejected the proposal after citing the possible harmful effects on the "vitality and viability" of local communities.
"Obviously, we are all bitterly disappointed with the decision as we felt that – along with our two partners – we had compiled and presented a most compelling case for the Destination Kirby project," chief executive Robert Elstone told the club's official website.
"We said all along that we not only believed the project to be deliverable but that it would have proved to be hugely beneficial for both Everton Football Club and the people of Knowsley."
However, a bullish Elstone claims the club will now step up their attempts to find a new home away from Goodison Park.
It is the second planning blow to strike the Merseyside club after their hopes of raising money through the sale of their training complex was rejected in January.
"We will now regroup and carefully consider the options which are open to us," added Elstone.
"I feel I must stress that we do remain totally committed to finding a new home for our football club. The hunt for that new home will now intensify."