The event in Milton Keynes opened on Saturday but organisers confirmed it was cancelled after parents reportedly bombarded its Facebook page with complaints about its quality.
One mother writing on a blog for the Natal Company said her family had paid £42 to pre-book tickets to find "men dressed in Santa outfits from Poundland". The Santa's Grotto was also closed initially because of a "technical issue", she wrote.
The ice rink also did not contain real ice, reports said.
Organisers promised that anyone who pre-ordered tickets would get refunds.
The event's charity partner the Papworth Trust said it was "concerned" to hear of the complaints and had withdrawn from the event.