The government has been accused of “financial blackmail” after failing to deliver funding for Northern Ireland.
Around 55 projects across the UK will receive a share of almost £1bn from the fund which aims to regenerate high roads and improve transport links.
But no funding was given to Northern Ireland.
Equalization Secretary Michael Gove's department said that “given the current absence of executive and assembly, the government is not proceeding with this round of the Equalization Fund at this time.”
Previously, Northern Ireland projects were awarded £120 million in the first two rounds of the fund.
The move comes as the Stormont Assembly and Executive remain in limbo after more than a year and a half amid DUP protest over post-Brexit trade arrangements.
The DUP and the government have been in talks since unionists identified problems with the Windsor Framework earlier this year.
The DUP has condemned an “outrageous act” by the government snubbing Northern Ireland's latest round of Leveling Up funding.
But Sinn Fein accused the DUP of staying out of Stormont.
DUP MP Sammy Wilson claimed the government was operating “under the cloak of financial blackmail” to “squeeze money out of Northern Ireland to boost Conservative seats in England”.
“Despite being entitled to 3% of the £1bn, Northern Ireland has not received a single penny from this round of funding, despite hundreds of eligible applications in the system,” he said.
“The government's reasoning for this decision is both bogus and outrageous.
“The absence of an executive has no material effect on allocations, indeed the main objection in Scotland and Wales to the equalization fund is that it is led by Westminster rather than the devolved areas.
“The government must be honest. The real reason for this allocation is to pump more money into the marginal seats in Great Britain where the Conservative Party is fighting.”
Ulster unionist peer Lord Rogan also criticized the government and described the decision as an “incredibly low and cruel blow”.
“I am appalled that, once again, the people of Northern Ireland are being used as pawns in a political game as punishment for the continued absence of an executive and assembly,” he said.
“These two issues are not related as the Leveling Up fund is a UK Government initiative that is administered and comes from Whitehall, not Stormont.
“There is no justification for this and local communities in Northern Ireland should not be attacked in this disgraceful way.”
Sinn Fein MP Conor Murphy said the Leveling Up decision was the result of “one party's reckless boycott of the executive is disgraceful”.
“The British Foreign Secretary has already imposed a punitive budget on people here, attacking public sector workers and services. This is yet another cynical attack on ordinary people,” he said.
“Workers and families continue to pay the price for the reckless boycott by one party in executive power. It is now time for the two-way negotiation between the UK government and the DUP to end.”
SDLP MP Claire Hanna said the DUP's “continued boycott” of Stormont gave the government “the perfect cover to let our services and infrastructure rot”.
“At a time when we are crying out for funding, many community projects will have missed out on money that would have made a real difference to places across the North,” he said.
“It's funny to hear the DUP talking about financial blackmail when they've been holding the people of Northern Ireland to ransom for the last year and a half. Regardless of the hardships that have hit people here, from the cost of living emergency to the collapse of our health service, the DUP has remained unmoved and raised its own political concerns about the needs of struggling people.”