Environmentalists opposed to the project said there had to be a radical rethink of the Government's attitude to dealing with the growing stockpile of radioactive waste.
Nirex, owned by Britain's nuclear industry and created to develop an underground waste dump, also announced that there would be job cuts among its research and development staff in Cumbria and contractors following the refusal by John Gummer, the Secretary of State for the Environment.
Sir Richard Morris, Nirex's chairman, said: "The ground rules seem to have changed during the inquiry process. We cannot get the information to show whether the site is safe or not without a rock laboratory but it now appears we cannot win approval for a rock laboratory without first showing the site is safe."
Nirex says Mr Gummer's decision raises questions about how the programme for deep disposal of intermediate level nuclear waste - which is still government policy - can be carried forward.
Dr Rachel Weston of Friends of the Earth said: "We need to go back to the drawing board now. The industry needs to stop pretending the disposal of nuclear waste is easy ... there now has to be a complete rethink on the way we manage radioactive waste in this country."Reuse content