Inverclyde's leader, Councillor Stephen McCabe, hit out after a request for £3 million in extra funding to tackle long-running issues was snubbed.
It was rejected by a government panel who said Inverclyde Council's bid did not meet the main purpose of the scheme 'to support large flood protection projects'.
Councillor McCabe claims the council was actively encouraged to bid.
He is calling for the panel to re-think its decision and to visit Inverclyde.
High tides regularly cause coastal flooding in Greenock and Gourock, which were recently hit by rising water in January this year.
Mr McCabe said: "Flooding in Inverclyde occurs in a number of places and that is why the scheme put forward aimed to tackle that situation.
"While the council has been left holed under the water by the Scottish Government's review panel it is the residents and economy of Inverclyde who will feel the real cost of this decision."
A spokeswoman for the Scottish Government said the council's bid was for an "amalgamation of clearance and repair works, which had been pulled together in order to meet the minimum-cost threshold of £2 million" not a "single large flood protection scheme".