Landmark's chairman Ken Morton confirmed that Persimmon had pulled out. He added: "It's nothing to do with the World Trade Centre collapse. They actually told us of their intentions almost two months ago."
"It is to do with the ongoing effects of Persimmon's merger with Beazer. It seems that the merger has been much more of a headache than they first thought it was going to be. They have pulled out of a number of schemes, including this one."
Morton told Building's LiveNews service that he was now talking to "at least three national housebuilders" who are keen to take the place of Persimmon.
As LiveNews predicted in July, Landmark St James is now in exclusive discussions with Bovis Lend Lease to be the lead contractor for the project. Bovis had been shortlisted with Amec to take on the contract earlier this year.
The Bridgewater Place tower was approved by Leeds city planners in July. Construction is still expected to begin early next year, with completion anticipated during 2003.
The Abbey Holford Rowe design for the tower was revamped earlier this year, following a damning Commission for Architecture and the Built Environment report in December.