Parcels of land were put up for sale by Walsall Council to generate cash towards a new modern £2.6 million facility in Queen Elizabeth Avenue, Bentley
But the bidder withdrew their offer and the land will be marketed again this summer. It is the latest hold-up after initial proposals were put forward in 2006 but were hit by the economic climate.
Bosses previously admitted the original scheme could be downsized.
Land that was earmarked for sale belonging to Walsall Council and Walsall Housing Group included Berkley Close, Wilkes Avenue and Churchill Road.
Sue Grainger, head of libraries, heritage and arts at Walsall Council, said: "Bentley Library was closed at the end of April 2006 following the identification of health and safety issues in the old building.
"There is the intention to replace the old library with a new building using the capital receipt raised from the sale of a number of parcels of council land around the centre of Bentley.
Between late 2007 and 2009 plans were drawn up for a new building which intended to be catalyst for other regeneration activity in the area."
In mid 2010, however, a decision was taken to place the development of Bentley Library on hold because of a severe downturn in the housing market.
"The parcels of land were re-marketed in November 2011 and an offer accepted. Planning recommenced, however, this did necessitate value engineering to make the scheme compatible with a reduced budget. Unfortunately, this prospective purchaser withdrew his offer and once again the project is seeking alternative funding.
"It is now proposed to put the land out for auction again in the summer," added Mrs Grainger.
Residents were initially consulted over proposals for the new library and even selected their favourite design after 72 architects from across Europe submitted bids.
The former library in Queen Elizabeth Avenue was closed more than six years ago and has since been demolished. Bentley councillor Angela Underhill said: "It is frustrating, we honestly thought last year we were heading towards having a library back again."