Option B was one of three routes for a new Thames crossing and would have passed through the Swanscombe peninsula, the land earmarked for the multi-billion pound leisure development.
A decision on the final route is expected after the 2014 local elections, with Option A, next to the existing Dartford crossing and Option C, between Gravesend and Strood, still being considered. A variant of Option C would see widening of the A229 in Kent between the M2 and M20.
Commenting on the announcement South East LEP chairman Peter Jones said: “This is clearly a step in the right direction; we are pleased to see that Option C is still under consideration. The majority of the SE LEP Board was in favour of Option C when they considered this in June, and businesses outside of Thurrock have expressed a unanimous view in support of this route.
“Removing Option B from the short list takes away one of the biggest barriers to the re-development of the Swanscombe peninsula; Paramount Park is a major scheme that could provide significant jobs and growth.
“Improving the flow of traffic across the Thames is essential; local and national economic growth is being adversely affected by the delays and unreliability caused by the existing crossing.”
The Thames Gateway Kent Partnership (TGKP) has also welcomed the announcement.
Rob Bennett, Chairman of TGKP, said: “The Partnership was clear in its response that an early decision to rule out Option B was essential, especially if there might be a delay in reaching a decision on the preferred location. So we are pleased that the Government has listened and responded to our concerns on this point.
“We urge that a final decision on location is reached as quickly as possible, in order to remove continuing uncertainty which risks inhibiting investment and growth in the North Kent economy.”