The Boomtown festival will not go ahead after organisers said the lack of a government-backed insurance scheme left them staring at a £10m “gamble”.
The 66,000-capacity event sold out in February and was due to take place at the Matterley Estate, near Winchester, from 11-15 August.
Organisers said they needed government help to insure against a late cancellation out of their control.
The event is hoping to return in 2022 between 10-14 August.
MPs also joined calls to protect festivals against potentially huge Covid losses but the government said it had already provided help through the Culture Recovery Fund.
In a statement, Boomtown organisers said: “We have been doing everything within our power to try to find a solution to the mind-boggling conundrum of putting on a safe and well-run event to the sheer scale, complexity and intricate nature of Boomtown this summer.
“With less than four months to go until the event, and after almost half a year of collective campaigning to the government, sadly Covid specific cancellation insurance for events simply does not exist at this point in time.
“This means anyone putting on an event this year, will be doing so without the safety net of insurance to cover them should Covid prevent them from going ahead in any capacity.
“For an independent event as large and complex as Boomtown, this means a huge gamble into an eight-figure sum to lose if we were to venture much further forward, and then not be able to go ahead due to Covid.”
Tickets for the 2021 event can be transferred to next year or refunded.
The five-day arts, music and theatrical festival was also cancelled in 2020 because of Covid.
Though the line-up of the 2021 event was a secret, recent years have seen the likes of Lauryn Hill, The Streets and Gorillaz take to the stage.