
It had been hoped that a bronze statue to James Braidwood, the city's first chief fire officer, could be erected in Parliament Square early this year.
But the council's planning committee has now ruled that the site is not acceptable, as it is seen to be more closely linked with Scotland's legal history.
A new site – close to Hunter Square – is now being looked at, and the campaigners who have been working on the project for almost two years have demanded the council avoids any further delays.
Edinburgh South MP, Nigel Griffiths, said the city's planning department appeared to be dragging its feet over the issue.
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"It was originally hoped the statue could go on the High Street, where the city's first fire station was located, but that was turned down," he said. "An application to put the statue up in Parliament Square was submitted, but now that has been refused as well.
"Another site, close to Hunter Square is now being looked at, and I really feel the planning department needs to help speed up this process, as it has been going on for almost two years now.
"The council is dragging its feet in providing a suitable High Street site. Everything is in place, and all that is needed is a location. That needs to be sorted out as soon as possible, as it is high time this man was given the recognition he deserves."
Braidwood founded the world's first municipal fire brigade in 1824 after a series of disastrous fires in the Capital, before becoming the first superintendent of London's fire brigade when it was founded in 1833.
He died in a fire near London Bridge Station in 1861, but his methods are still used to teach firefighters to this day.
The seven-foot memorial statue has already been completed by renowned Scottish sculptor Kenny Mackay, whose most famous work to date is of Donald Dewar, in Glasgow's Buchanan Street.
The campaign to erect the monument was started by 92-year-old former Edinburgh firemaster Frank Rushbrook, who said he would be happy to see the monument in a "visible location" such as Hunter Square.
But he added: "I sincerely hope this will not cause any great delay, as it is almost two years now since this monument was first proposed.
"I am desperately anxious to see some real movement on this now, and I would hope a decision on the Hunter Square site can be made very early on in the year."
Former councillor Ken Harrold, also a former chair of the fire board, joined calls for a new site to be found as soon as possible.
"It is a pity the statue could not go on Parliament Square, and I think it is vitally important that it is found a home in the High Street, close to where Braidwood founded the fire service," he said.
A council spokeswoman said: "We are working closely with the group to identify a suitable location for this monument which is a fitting tribute to a significant figure from Edinburgh's recent history."
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