Pompey have announced it will freeze any plans to move to Horsea Island and instead redevelop Fratton Park.
The football club's new plan will see the club's current home increase in capacity to 30,000.
The decision was made to put on ice the Horsea Island scheme following a number of planning and financial issues.
- New exits to the Horsea Island site from the M27
- A new bridge from Tipner to Horsea Island to link the two developments
- A change to the city plan proposed by the council to accommodate the stadium will still need to be subject to an inquiry by an independent inspector appointed by the Secretary of State
- The issue of the 'credit crunch', which has affected housing and almost all other developments, as well as lenders' attitudes to large projects
In a statement Pompey said: 'The club's ultimate aim remains a 40-45,000-seater stadium at Horsea Island near Port Solent, along with a multi purpose arena and residential and retail development to help fund and support the project.'
Initial work on Fratton Park would see the pitch turned 90 degrees and see two new stands, an extension to the Fratton End and refurbishments made to the south stand.
This work would be paid for by selling off part of the site to a major supermarket.
The club would also build a new club shop, ticket office and club offices.
Pompey say work could start before the end of the year, subject to planning permission.
The capacity would initially grow to 25,000 for the start of the 2010/2011 season and 30,000 once the work is completed by the beginning of the 2011/2012 season.
A planning application for the work at Fratton Park would be submitted 'as soon as possible', the club said.