The festival was due to host headliners Queen, Kiss, Marilyn Manson and Faith No More alongside a host of other acts and its cancellation may be a worrying sign for an industry which has been leaning heavily on live music revenues.

"It is with very heavy hearts and much regret that we announce the cancellation of Sonisphere Knebworth 2012," the Sonisphere organisers said in a statement on their website (www.sonisphere.co.uk)

"Putting the festival together in what is proving to be a very challenging year was more difficult than we anticipated and we have spent the last few months fighting hard to keep Sonisphere in the calendar."

The festival at Knebworth Park, a country estate which has been hosting music festivals since 1974, is the first of the high profile festivals in Britain to succumb to harsh economic conditions in Europe and raises a question over the sustaining value of live music revenues for an industry already suffering from declining revenues for its recorded music.

Festival organisers said all ticket holders will receive a full refund direct from their ticket agents.

"We want to express our deepest regrets to the artists and to thank all the staff, suppliers and contractors who worked so hard with us to try and pull off what has proven to be an impossible task and we know how much they share in our disappointment," they said.

(Created by Paul Casciato)

• A Permanent Economic Emergency