The LDS First Presidency announced the temple for Honduras' largest and capital city of Tegucigalpa on June 9, 2006, meeting the needs of 120,000 Mormons in the country.
A year later, LDS members and officials helped break ground for the sacred structure.
But construction had to be halted in September 2007, due to the opposition of several city officials.
After months of negotiation, Tegucigalpa's mayor refused to approve the plans and the church withdrew.
LDS Church officials had no comment about the matter Thursday.
The news of Mormon withdrawal came as thousands of Hondurans were making their way to Our Lady of Suyapa, to celebrate the annual feast of the patroness of Honduras, Catholic News Service reported.
Suyapa's story traces back to 1747, when Alejandro Colindres, a Honduran laborer, reportedly found the tiny statue, only 2.3 inches tall, while sleeping in a corn field northeast of Tegucigalpa. It was sticking in his side as he slept.
Colindres took the statue home, so the story goes, and kept it on a family altar for the next 20 years. Devotees built the basilica in 1777 and, in 1925, Pope Pius XII declared Suyapa, the patron saint of Honduras.
Mormonism in Honduras is on the rise, Catholic News Service reported, but the Utah-based church's presence has "never been the object of hostility on the part of Catholics."
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(Source: MDTS)