While the town centre received £10.2m, the second application for £16m titled Elsecar Forging Ahead was rejected by the government.
A new 3,140 square metre waterfront suite of buildings was mooted for a brownfield site next to the canal at Elsecar, with 40 workshops and a new cafe also planned.
Sir Steve said: “We’re disappointed that our £16m bid to further develop Elsecar Heritage Centre into a national tourist destination was unsuccessful on this occasion.
“However, we remain committed to our vision for Elsecar, and we look forward to working with government and other agencies on how we can secure funding to make it a reality.
“We will be inviting the Secretary of State Michael Gove to meet with ourselves and South Yorkshire Mayor Oliver Coppard at Elsecar.”
The Barnsley East constituency has yet to receive any funding from the government, prompting MP Stephanie Peacock to ask ministers to level up Barnsley and not their ‘millionaire mates’.
She said: “Levelling Up is meant to provide support to the areas that need it most.
“Barnsley East is yet to receive any Levelling Up funding, even though we are by every one of the government’s measures.
“I’ve called for Barnsley East to receive levelling up funding in Parliament several times, questioning why the Prime Minister Rishi Sunak’s well-off constituency received money whilst Barnsley did not.
“I welcome the fact the Secretary of State for Levelling Up accepted my invitation to visit Barnsley East to meet the The Coalfields Regeneration Trust to discuss levelling up funding for coalfield areas across the country.
“If levelling up is to do what it set out to, I hope the government will consider my constituency of Barnsley East for funding.”