The fair, which was due to open to the public on Wednesday, was quietly shelved a couple of weeks ago when exhibitors were informed via email, Dezeen understands.
"It is with real sadness that I announce the ArDe Fair 2016 has been cancelled," said Esperanza Koren, ArDe's founder and CEO.
"It has simply not been possible, in the time available, to pull together enough sponsors to enable us to mount the show this year," she told Dezeen.
Some exhibitors and participating designers are thought to have been left out of pocket by the cancellation, but Koren did not respond to questions on this matter.
It is the second blow to London's credentials as a design capital, following the failure yesterday of the London Design Festival's Kickstarter campaign to fund a giant designer crazy golf installation in Trafalgar Square.
The Visionary Crazy Golf project raised just £22,765 out of the £120,000 required for the temporary project, which would have occupied the central London square during the festival in September.
Announced last year, ArDe billed itself as multidisciplinary fair straddling architecture and property, interior design, landscape and art. It was due to take place from 8-12 June this year.
The elegant rooms, basements and courtyards and terraces at historic Somerset House were intended to be filled with exhibitions and installations while a lively conference programme was promised.
"With a focus on innovation, sustainability and quality design, ArDe is an international platform that presents contemporary architecture and design through specially tailored events, talks, workshops and commissions," the promotional material said.
"The event will be a valuable networking and business opportunity for exhibitors, allowing them to present their concepts and products before numerous buyers and decision-makers, creating a dynamic marketplace where thousands of people with shared interests will come together and trade."
However the curatorial team kept changing, with Gonzalo Herrero resigning as creative director in July last year. A second, short-lived curatorial team was announced at the end of 2015, which included Dezeen columnist Sam Jacob.
"With the minimal time we had to prepare for the show, we have covered enormous ground in every aspect of the show's preparation," Koren continued. "However, it has not been sufficient for us to gain enough content and sponsorship backing in order to host the show."
Koren said she now hoped to reschedule the exhibition for next year.
"I am presently in discussions to move our plans to next year and rolling forward a lot of the investment and energy which was poured into our plans for this year’s show," she said.