Hutchison Ports UK was seeking to vary its original 2006 permission to allow it to construct the container terminal platform at Bathside Bay in Harwich in advance of highways improvements to the A120.
Under the current permission the highways improvements must be started before beginning work on the terminal.
Tendring District Council said high-level talks with the government, the council and the ports company will take place next month to try to sort out the situation.
In a letter to the council, Hutchison Ports said that it had taken the decision to withdraw the application "particularly in light of the anticipated costs and delay associated with a call-in and public inquiry".
Tendring Council’s leader Neil Stock said that the company’s decision was a blow but he understood its reasons.
"They must have been absolutely gutted when they heard the government had gone for a public inquiry and quite frankly I am not surprised they pulled the application," he said.
"We constantly hear that planning should not stifle the country’s economic growth but then the secretary of state for the Department of Communities and Local Government seems to go totally against that edict where Bathside Bay is concerned."
Stock said that the development, which is expected to create around 700 jobs and thousands across the district in associated services, is vital to the economy of Tendring and its regeneration plans.
"I sincerely hope that the delays do not mean that Hutchison Ports feel they would be better off investing elsewhere," he said.