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Lichfield Cathedral has had its application for £5m of lottery funding turned down.
The Staffordshire Cathedral had wanted the money for its Lichfield Inspires scheme, which aims to improve conservation and education work.
The Heritage Lottery Fund said it was unable to grant the request due to heavy competition for funds.
The Rev Adrian Dorber, the Cathedral's Dean, said bids for Olympic funding meant the money was harder to get.
Mr Dorber said: "The problem is the Olympics. The government has made early raids on the heritage pot this year.
"In normal circumstances they (the trustees) would have funded it."
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