The Department of Justice has scrapped its plans for a direct-provision centre in Rooskey, Co Roscommon.
The Shannon Key West Hotel had been earmarked as an accommodation centre for 80 people.
However, the Department of Justice has confirmed that following legal advice, the plans have now been dropped.
It's because of difficulties over the lease agreement between the company renting the hotel - who wanted to turn it into a tourist spot - and the owners.
A spokesperson for the Department of Justice said "these lease arrangements and these matters are outside our control."
However the Department says it remains "committed to sourcing suitable premises to meet the accommodation needs of people in the international protection process."
It says a regional procurement process is underway and will continue throughout the year.
