A legal challenge could delay the start of restoration on Britain's only Grade I listed pier for many months or stop it altogether.
There is a danger the West Pier in Brighton could collapse further if work does not start on it soon.
Pier experts are looking at ways of protecting the historic structure against severe winter weather. The delay is because experts on European law are looking at whether it would be unfair to award National Lottery money to renovate the pier.
The Heritage Lottery Fund is asking for an opinion from Brussels and Whitehall on the application for up to £14 million for the West Pier in Brighton. There will be a delay of several months before a decision is made.
The fund has previously agreed to the grant but there is now a new private operator involved in the project, St Modwen, which also runs Brighton Racecourse.
The Noble Organisation, which runs the rival Palace Pier, has complained to the fund that making the grant would be unfair.
Director David Biesterfield said the proposals also included two large new buildings at the shore end of the pier, which would be put to commercial use.
He said: "We are in limbo at the moment. It is currently under review by the EC.
"We take the view that this is unfair competition. We still feel it is a ludicrous proposal."
He said restoring the pier was clearly a commercial venture with the shoreline development taking up more space than the pier itself.
Mr Biesterfield said if the fund still made the grant after consulting the EC, the Noble Organisation would look at a further legal challenge.
Dr Geoff Lockwood, chief executive of the Brighton West Pier Trust, said the fund wanted to make sure that making a grant was correct under both UK and European law.
He added: "Unfortunately it is going to take a few more months before the decision is made."
Dr Lockwood said there was still plenty of work to be done in the meantime, including looking closely at the development proposed for each side of the pier, which has attracted some critical comment.
He said the delay was disappointing but both the trust and St Modwen would make good use of the time.
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