Leicester – the first city in the UK to be put in local lockdown – will not receive special financial support from the government.
Businesses in the city had expected extra help after they were ordered to close on 30 June following a spike in Covid-19 cases.
But a letter from minister Nadhim Zahawi said there were no plans to change or extend any current schemes.
Labour MP Liz Kendall said she was “so angry” at the development.
The shadow social care minister, who released a letter from Mr Zahawi about the government’s stance, said it was “a warning for future local lockdowns”.
“People in Leicester have made huge sacrifices and everybody is hanging on in there,” she said.
“They’ve gone back, they have stayed at home, they’ve closed their doors.
“People are trying to do the right thing, make yet more sacrifice. I think it is wrong the government isn’t saying ‘you’re in lockdown for longer, you’ll get the help for longer’.”
Ms Kendall, MP for Leicester West, urged Chancellor Rishi Sunak and Prime Minister Boris Johnson to “think again”.
Leicester Mayor Sir Peter Soulsby told the BBC he was “absolutely furious” the expected funds had not materialised, describing the lack of extra measures as “brutal”.
Last week, Health Secretary Matt Hancock told the BBC there would be extra financial support for Leicester businesses affected by the local lockdown.
He said: “We have given support to both the county council and the city council to make sure they have discretionary funds available to support businesses, if that’s what’s needed.”
In his letter, Business Minister Mr Zahawi claimed the city council had spent less than £500,000 of a £3.5m discretionary grant awarded to it.
He went on to write: “I hope the lockdown is temporary and that affected businesses in Leicester are able to re-open soon.”
Ms Kendall added: “I don’t think you can tell people one thing one day and tell them something else the other. It is just not right.”
A Government spokesperson said: “The circumstances of individual lockdowns will continue to be carefully assessed before appropriate action is taken”.
The lockdown in Leicester will be reviewed on 18 July.