The proposed £28 billion merger of defence giants BAE Systems and EADS is off, sources said today.
Unions believed the link-up would have created a strong company to guarantee jobs in the long term.
The merger would have created a defence titan with combined sales of £60 billion and more than 220,000 staff, with around 52,000 employees in the UK alone
There had been reports that the French, German and British governments were at loggerheads over the level of state ownership of any combined firm.
Unite urged the UK Government to strengthen its "golden share" in BAE Systems by taking an active stake in the company to safeguard British jobs and boost British manufacturing.
The union, which represents over 30,000 skilled workers across the two companies, had been pressing for guarantees over jobs if the merger had gone ahead.
National officer Ian Waddell said: "The highly skilled workforces of both companies are the beating heart of British manufacturing. A merger, with a jobs guarantee, would have created a strong new company that could have protected the UK's long term interests.
"There was an industrial logic to the merger, but national and political interests proved to be the stumbling block. The UK Government now needs to strengthen its golden share and send a powerful message that it backs British manufacturing and BAE Systems.
"Short-termism cannot be allowed to govern BAE's future. BAE management in the past has made some crucial wrong decisions, such as selling its stake in Airbus in 2006.
"We need to ensure the company plans for the long term and that short-term investor pressure is balanced with employee representation on the board.
"BAE is a great British company. The Government needs to follow the example of Germany and France where they pursue an active industrial policy and adopt an approach that safeguards the highly skilled jobs which are critical to our country's defence."