The stunning decision, announced by Energy Secretary Sam Bodman in a rancorous meeting with Illinois lawmakers Tuesday morning, comes little more than a month after Illinois won a heated national competition to host the project and one day after President George W. Bush mentioned the technology in his State of the Union speech.

“After our meeting today, it is clear that Secretary of Energy Sam Bodman has misled the people of Illinois, creating false hope in a FutureGen project which he has no intention of funding or supporting,” Sen. Richard Durbin, D-Ill., said in a statement. “In 25 years on Capitol Hill, I have never witnessed such a cruel deception.”

The secretary personally presented his decision behind closed doors to state officials and the Illinois congressional delegation, which had called the meeting to find out why DOE was dragging its feet on the project's environmental impact statement.

Three years after he became secretary of Energy, Mr. Bodman told the lawmakers that "he didn't believe in the project," according to a Capitol Hill source familiar with the discussion. "It's something I inherited but not something I believe in," the source said, paraphrasing what the secretary said at the meeting.

"We are committed to advancing FutureGen's important objectives and are ensuring the appropriate due diligence in pursuing a restructured approach that maximizes technological advances over the past five years and harnesses private sector innovation, facilitates the most productive public-private partnership, and prevents further cost escalation," an Energy Department spokeswoman says in a statement. "We plan to announce details in the coming days." She declined to comment on what Mr. Bodman told the delegation.

FutureGen is designed to use coal gasification, a technology that burns cleanly but still produces carbon dioxide, a greenhouse gas that contributes to global warming. Its critical technology would capture the carbon dioxide and pump it deep into the ground, trapping it in layers of sandstone.

Doubts about the project cropped up in December, soon after the industry consortium backing the project decided on Mattoon, beating out another Downstate site and two in Texas.

Energy Department officials refused to issue a final environmental clearance report, citing the project’s escalating costs. Under their agreement, industrial partners were expected to put up about $400 million, with the federal government picking up the rest.

“Today’s meeting was a disappointment but not a surprise,” says Frederick Palmer, a lobbyist for St. Louis-based Peabody Energy Co., one of the industry partners in the FutureGen Alliance. “It’s clear to us that DOE wanting to renegotiate was not true — they wanted a path out of the project.”

After Energy Department officials raised concerns about the costs, the FutureGen Alliance made a counteroffer to go forward with the project, but DOE never responded to that, according to Mr. Palmer, who thinks the project can still go forward if it is directly approved and funded by Congress.

“The Illinois Congressional delegation is going to make the case for FutureGen directly to the president,” Sen. Durbin said in his statement. “We will not go down without a fight.” Gov. Rod Blagojevich said in a statement, "The U.S. Secretary of Energy's proposal to dismantle FutureGen is an example of politics at its worst. Secretary Samuel Bodman is not only jeopardizing the benefits FutureGen promises to deliver, but he deceived the people of East Central Illinois who spent time and resources competing for the project. We're not giving up the fight to make FutureGen a reality in Illinois.”