Welsh government ministers say the housing industry has withdrawn support after similar, but separate, plans were announced by the UK government.
The scheme would have enabled buyers to have high loan-to-value mortgages and supported the building of 3,000 homes. NewBuy had been promoted as a "major boost to the construction industry" in Wales promising "a positive impact on the housing market".
NewBuy Cymru was due to be launched on June 3 and would have been open to everyone buying new build houses or flats worth up to £250,000 with a 5% deposit.
However, ministers accused UK Government of 'pulling carpet away' from project.
Housing Minister Carl Sargeant said a UK government scheme involved less financial risk for housebuilders.
Responding to the Housing Minister's announcement that the NewBuy housing mortgage scheme has collapsed, Peter Black, Welsh Liberal Democrat Shadow Housing Minister, commented.
He said:
"This scheme was agreed as part of a budget deal with the Welsh Liberal Democrats and I believe it would have been reasonable for the Welsh Government to have delivered on their promise.
"The Welsh Labour Government has taken over a year from the initial announcement to put together a scheme only to see it collapse under the weight of its own complexity. Having dragged their heels, the Welsh Labour Government has left first time buyers with no way forward to get on the housing ladder.
"Time and time again the Welsh Labour Government delayed the introduction of this scheme. We were told numerous different dates when it was meant to be introduced, yet nothing came. Now, due to the failings of this Welsh Labour Government, the scheme has collapsed. This incompetence is intolerable.
"This announcement comes in the same week that the Welsh Labour Government's £36 million back-to-work scheme, Genesis Cymru Wales 2, was wound up due to significant underperformance. This Welsh Labour Government seems incapable in getting anything right at all and sadly it is the people of Wales and the Welsh economy that is paying the price for the Government's failings."
