Two Magherafelt housing estates, who refused to drop depictions of World War I soldiers from gateway features, have been refused funding by the local District Council.
Residents of Beechland and Leckagh estates had argued that the soldiers reflected their cultural identity and should be permitted.
However the Sinn Fein controlled council decided at the monthly meeting to turn down their requests because the depiction of an armed man was not inclusive and fell outside the remit of Peace III funding.
Back in November of last year the council approved the designs for the Killowen and Glenburn estates.
But nationalist members were not happy with the replica of a First World soldier as a centre piece in the Beechland and Leckagh features.
A number of meeting took place with representatives of community groups from both areas to ascertain if an agreement could be reached the gateways progressed.
The council then put off making a decision until after the local government elections in May.
Sinn Fein Councillor Peter Bateson said he would be against depictions of people armed with guns even if they were on a Republican gateway feature.