The decision was taken in light of new information coming forward from key partners within the scheme including Cumbria Police.
A redesigned scheme for the Homelessness Centre of Excellence will be drawn up early next year.
Carlisle City Council secured a funding grant of £1.89 million, in May, from the Department for Communities and Local Government on the proviso that Carlisle City Council increased the number of clients who are able to move on to independent or more appropriate accommodation as well as increasing the number of clients moving into education and employment.
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The Centre of Excellence will draw together services, agencies and voluntary sector bodies who will be able to provide training, life skills advice and increase access to health care services for residents in a new, specifically designed, high quality facility.
Mike Mitchelson, Leader of Carlisle City Council, said: "We are committed to supporting the city's homeless who find themselves in a vulnerable position and seek our help and support. We have had a rethink on the current project following discussions with the public, local community, partners and other agencies and have taken into account the concerns people have raised.
"We want to keep up the momentum and the support we have received for the Centre of Excellence and will be amending the scheme for the Department for Communities and Local Government consideration.
"New accommodation for women and families is still a priority and we need to carry out new more in-depth work with our partners on where we can provide a new facility within the city."
(CD/JM)
