READING Prison is set to remain "mothballed" indefinitely as the Ministry of Justice confirm they wish to leave the site deliberately vacant.
The Government agency has said it needs to keep the building as a contingency measure in case prisoner populations elsewhere in the country suddenly increase.
Reading Borough Council has repeatedly called on the ministry to put the site to better use and the council's deputy leader Cllr Tony Page slammed the decision.
Cllr Page said: "This is a bombshell and disastrous announcement which shows how little the Ministry of Justice recognises the value of this site in the context of the adjoining Abbey Quarter site.
"A unique opportunity is in danger of being lost as a result of Government dithering and procrastination."
Surrounding the prison - best known for the incarceration of Oscar Wilde - are the remnants of Reading Abbey which the council is currently seeking to restore.
Founded in 1121 by King Henry I the Abbey is thought to be the ruler's final resting place, which could include locations inside or underneath the prison's walls.
The council had to close the ruins in 2009 after the deteriorating structures were deemed to be a hazard to visitors.
As part of their plans to boost the Abbey Quarter as a tourist destination Reading Borough Council has insisted developers need to have a clearer picture on the prison's future.
In a letter addressed to Cllr Page the MoJ's deputy director Andrew Holdsworth said: "We have retained a small number of closed prisons as a contingency measure.
"It is sensible that we have contingencies in place to deal with unexpected events such as a larger than projected increase in the prison population.
"This allows us to have reserve capacity without the cost of keeping them fully operational."
Mr Holdsworth added there are no current plans to reopen the prison.
Reading Prison closed in November 2013 and since the last inmates were moved councillors and community campaigners have sought to bring the site back to life, citing the revamp of Oxford's city centre prison.
Cllr Page said: "My appeal to Michael Gove and the Government is to reconsider their decision and advance the disposal of the Reading Prison site as soon as possible so as to dovetail into the exciting regeneration of the adjoining Abbey Quarter."
Reading's Labour group have since launched a petition seeking residents to join their call for action which can be found online at http://chn.ge/1KQFc53