The government last week announced it would not proceed with plans to build an athletics venue in Picketts Lock, London, despite earlier assurances given to the International Association of Athletics Federations (IAAF), the sport's world governing body.
A spokesman for Norwich Union, which recently signed a £20m deal with UK Athletics to secure title sponsorship of domestic athletics events until 2006, said the collapse of the project was a "letdown for the sport in Britain.
"We are obviously very disappointed that the government has decided not to pursue the Picketts Lock proposals, because the 2005 championships would have been a great opportunity to showcase British athletics talent and the investment the sport is making in grass-roots development, said the spokesman.
Rover, which has a commercial agreement with UK Athletics as well as a sponsorship deal with the British Olympic Association, said the government's "mismanagement of the situation could lead to UK athletics being seen in an unfavourable light abroad.
"If the government is wavering over its commitment to the sport, then clearly that reflects badly on those who are involved with the sport," said a Rover spokesman.
Reebok said it was disappointed by the decision, although its current sponsorship deal expires a year before the 2005 Championships.
Last weekend, the IAAF gave the UK until the end of next month to find an alternative venue for the 2005 Championships. However, IAAF president Lamine Diack ruled out Sheffield as a possible replacement.
Secretary of state for culture Tessa Jowell said the rejection of Picketts Lock was justified because of the amount of National Lottery money needed to fund the project.