It said that, as a result of "continuing adverse economic conditions", the council and SRL have agreed to end their exclusivity arrangement on the project.
Stevenage Borough Council leader Sharon Taylor said: "It is disappointing that, due to market conditions, our partnership was unable to deliver SRL’s scheme, but we appreciate the support that SRL has provided to date and understand that the recession has forced them to make this difficult commercial decision.
"However, regenerating the town centre is critical to the future of Stevenage and remains a key priority for the council. We are, therefore, actively and urgently considering a number of options to bring forward new opportunities for development."
Outline planning permission for the project, which the council said would cost approximately £250 million to complete, was granted in January this year and included restaurants, shops and 120 new homes, as well as provision for a bus station and car parking.