Organisers were forced to call off the three day event, which was expected to draw in crowds of 60,000 people, on health and safety grounds after torrential rain turned the Bilsborrow showground into a quagmire.

It is the second consecutive washout for the show, which moved to the new purpose built venue off the A6, near Garstang, after last year's event at Salesbury, near Blackburn, was cancelled.

Adrian Marklew, spokesman for the Lancashire and Blackpool tourist board, said: "It is really desperate news.

"Many local food producers would have had stalls. In terms of an impact several millions pounds have been lost."

Hugh Evans, director of policy at Lancashire Chamber of Commerce, said the cancellation would be a blow to small businesses selling at their fair.

He said: "This is a huge disappointment.

"The show's cancellation will hit these businesses hard."

Wyre MP Ben Wallace believes question marks will now remain over the use of the Bilsborrow site.

Campaigners had warned of traffic chaos during the show.

And Mr Wallace said: "It is a shame Lancashire is not having a show which befits the county."

Several inspections were carried out on the site in the 48 hours before the decision to cancel the show was taken.

Extremely heavy rain overnight on Wednesday created very difficult conditions which deteriorated when vehicles arrived to set up yesterday.

Gordon Roberts, chairman of the show, said: "We are obviously extremely upset for everyone who has worked so hard and supported the show.

"The team are devastated the weather has defeated us again this year."

Despite the rain, however, organisers of this weekend's Bispham and Weeton galas are holding firm and refusing to cancel their events – although some activities may have to be moved inside.

The annual Town Criers Championship in Blackpool on Saturday and Fleetwood's annual Tram Sunday Transport Festival are also set to go ahead.