ACT Education Minister Chris Bourke finally canned the proposal to run associate degrees and diplomas through the ''University of Canberra Institute of Technology'' late yesterday - having placed planning processes on hold last month in order to pursue a separate $28 million deal with the Commonwealth for vocational and educational training reforms.

Under pressure from the ACT Greens to reveal details of the new institution by this week, Dr Bourke confirmed suspicions the deal was off when he announced, ''Any further work on collaboration between UC and CIT will not happen in the term of this Assembly and will depend on first implementing these VET reforms in the ACT.''

''We now have an opportunity to invest $28 million to build a stronger VET sector in the ACT through the CIT,'' he said.

While the CIT is expected to take a sizeable share of the $28 million VET funding allocated last month through the Council of Australian Governments meeting, a separate pool of $25.9 million in structural adjustment funding allocated to the UC will need to be renegotiated.

Vice-chancellor Stephen Parker was exasperated with the process.

''From the university's point of view I feel we have wasted a lot of time and energy,'' he said.

The UCIT was an 11th-hour compromise deal which came out of last year's review of the ACT's tertiary and training sectors conducted by Emeritus Professor Denise Bradley.

Professor Bradley recommended a full merger of the UC and CIT, warning both faced significant threats in the new marketplace.

Professor Parker said the ACT government had completely ignored Professor Bradley's advice ''and the same long-term issues Denise Bradley highlighted for the ACT have not gone away''.

These included the fact that the ACT was a small jurisdiction which couldn't offer the full suite of tertiary or training options and would lose students to interstate institutions.

Professor Parker said he was somewhat relieved the ACT government had finally made a decision and UC was putting the UCIT proposal behind it.

''We have been working with the Commonwealth over the past few weeks on a revised project, the Commonwealth has been constructive and I am optimistic about the outcome,'' Professor Parker said.

But he would not comment further on whether the new project was his plan for the UC to operate its own polytechnic - which was in the pipeline before the UCIT deal coming up - or whether it was a new arrangement.

CIT chief executive Adrian Marron said it seemed a sensible conclusion to abandon the UCIT given the territory had signed up, to considerable vocational education and training reforms through the National Partnership Agreement.

These reforms include the development and implementation of income contingent loans as well as a national training entitlement, all within a more open market.

''We have a lot that we need to get right,'' Mr Marron said.

He said collaboration between the UC and CIT on many courses would continue.

The National Tertiary Education Union's ACT division secretary Stephen Darwin said the ACT could breathe a sigh of relief following the decision.

''This ill-fated proposal for a third institution was a poorly conceived bureaucratic compromise that never was based on any clear educational foundation. It had the potential of weakening the higher education offered by the University of Canberra and the vocational education offered by CIT,'' Mr Darwin said.

He praised the Greens for scrutinising the proposal in the Assembly.

Liberal education spokesman Steve Doszpot said the failed venture was ''another example of a poorly managed Labor project which has kept the community, the Assembly and most importantly the teaching staff and students of both institutions in the dark.''