Hammersmith and Fulham is the only borough in London to be denied cash for primary schools after the council's application form was rejected.
The £1.75billion pot of cash from central government was due to be shared out to all local authorities in the country to transform schools in a rebuilding programme.
But of 148 applicants, H&F was among 15 which missed out and will have to reapply in the hope of receiving the money in April.
National Union of Teachers secretary for Hammersmith and Fulham Dennis Charman said: "I think this is serious. All the other authorities bar 15 managed to get their bids but H&F didn't, which is pretty damming."
The money is part of the capital state education programme. Government officials will not hand out the cash until they are satisfied with local authorities' plans.
A DfES spokeswoman said the plan was rejected because it needed to be more clear on how it would help underachieving schools. It required more evidence for how schools will help disadvantaged children and a clearer explanation of the council's proposals.
On the council's bid being rejected, MP for Shepherd's Bush Andrew Slaughter said: "How bad can these people be?
The government has once again offered the biggest investment in a generation to improve schools and all the Tories had to do was come up with a reasonable plan on how to spend it.They can't even do that. It shows they put no priority on state education."
Cabinet member for community and children's services Antony Lillis said: "The council is naturally disappointed that our application has not been given automatic approval. We will be resubmitting our revised bid by the end of January 2009 and would like to reassure parents that our plans for primary school education remain on track. We are confident we will secure funding for an April 2009 start."