Ministers say they want to spend funds on maintaining existing routes and investing in public transport. It says there will now be a review of its highway schemes.
There had been hope that the Welsh Government and the Highway's Agency in England would work together to bring forward the A483 bypass.
When Prime Minister, Boris Johnson, launched the Welsh manifesto at the last UK election in Bangor-on-Dee he said the Conservatives would push for highway schemes like the bypass to go ahead.
Now Craig Williams, Welsh Conservative MP for Montgomeryshire, and Russell George, member of the Senedd have written an urgent letter to the Welsh Government about the freeze.
Mr Williams said: “I am dumbfounded by the suspension of road building across Wales. The UK Government have banned the sale of new diesel and petrol cars from 2030, which has mobilised the market to seek alternatives such as electric, hydrogen and biofuel. This will of course have fundamental consequences in terms of car ownership and use, and the need for investment in our roads will be hit by the very old and traditional approach to climate change.
“In terms of the local preparations for the Llanymynech Pant Bypass, current works will not be affected as the UK Government are continuing in progressing options and the business case. Previous Welsh governments have committed to funding their share of the bypass, and we have written to discuss how this suspension will impact upon the bypass.
"There are two options; either the Welsh Government concludes that the bypass is essential - which I fully believe it is- and fund their proportion; or otherwise we will push the UK Government to fund the entire project given its status as an essential road improvement locally, regionally and nationally.”
The Welsh Government says its recently-published ‘Programme for Government’ shows how it will act decisively to tackle the climate emergency.
It says transport makes up some 17 per cent of the UK's total emissions and it needs a shift away from spending money on projects that encourage more people to drive and spend more money on maintaining our roads and investing in alternatives.