Plans to accommodate hundreds of tents near the first King of the Mountains challenge in the Tour de France, have been scrapped.
Disappointing ticket sales and excessive red tape have been blamed by Kidstones Camping.
All the people who have booked pitches and paid are to have their money refunded. The process has already started.
Also ditched are arrangement for at least one bar, TV screen and food and drink.
Preparations are continuing, however, to allow 2,000 cars to park at the location and disappointed campers are being offered one free parking space.
Letters and emails being sent out explain: "We are sorry to report that a combination of disappointing ticket sales and excessive red tape mean that Kidstones Camping can no longer offer camping for the race.
"We have invested very heavily in both time and money but feel that a partial cancellation is the best way forward.
"We have not taken this decision lightly and we can only apologise for the interference caused.
"It has been made given the low numbers of bookings combined with ever increasing cost of visitor Health and Safety."
The plan to provide a least one bar on the site and a TV screen food and drink were abandoned following correspondence with Craven's Safety Action Group, said a Kidstones Camping spokesman.
SAG is made up of police, fire, ambulance and local authority representatives to examine and advise on safety plans and licensing requirements.
Tom Hawkins, who is overseeing the Velofest further down the valley at Kilnsey, said strict guidelines had been imposed by SAG.
" We are expecting up to 10,000 people on site each day from July 3 to 6 with the vast majority of these people camping.
"The safety of our guests is paramount so we had to absorb the cost and ensure we used a reputable first aid contractor with a proven record for delivering results."
Before finding the replacement, they had been faced with a £50,000 bill from St John Ambulance which had given him "sleepless nights".
Recruited for the event have been a doctor, paramedics and emergency first aiders, who will work from a fully equipped medical centre and a campsite first aid point.
Two ambulances and a rapid response vehicle will also be on site
"With the event just over a month away, we are all getting very excited about it as we have various music acts performing on the Saturday and Sunday night including Toploader and several local bands," he added..
Craven Council's David Smurthwaite said Kidstones event organisers had received support from a number of agencies advising them of their responsibilities in running a safe event and on what should be contained within the event management plan.
"Unfortunately the members of the Safety Advisory Group did not feel that there was sufficient planning at this stage to ensure a safe event.
"As there are only a few weeks to go before the Tour De France, the Kidstones Event organisers have decided to reduce the scale of their event,” he said.