The two sides are now deadlocked on who will pay the hundreds of millions of dollars to clean up more than 100 sites around the capital where deposits of the deadly substance have been buried for decades.

Chief Minister Katy Gallagher says the federal government has funded big clean-up operations on some contaminated sites but is still refusing to accept responsibility for others. Ms Gallagher is appealing to Prime Minister Julia Gillard to intervene.

The relevant federal department, Regional Affairs and Local Government, says it is working on a national solution to buried asbestos.

The deadlock casts doubt on one of Canberra's biggest and most important urban renewal projects, the East Lake development at Kingston, which was earmarked for medium- and high-density housing for up to 8000 people, and is a key part of the government's planned land release program for the coming years.

There are more than 600,000 cubic metres of contaminated soil on the site, much of it waste from the construction of Parliament House, carrying an estimated clean-up bill of $90 million.

The Commonwealth has refused to help with the clean-up, arguing that the land was transferred to the ACT at self-government and it is the territory that must accept responsibility.

But the Chief Minister has written to Ms Gillard asking that the Commonwealth observe the ''polluter pays'' convention.

Ms Gallagher said the Commonwealth had cleaned up polluted land at Kingston Rail Yards, on former National Railways land and that defence sites at Bonner and Lawson had been remediated at federal expense. To refuse to fund clean-ups at other sites was ''inconsistent.''

Ms Gallagher said the talks between the two parties, convened last year after she threatened to sue the Commonwealth, had broken down but that the territory would not stop pursing an agreement with the federal government.

''I consider the Commonwealth has a moral and financial obligation to the citizens of the ACT to assist in remediation of sites contaminated prior to self-government,'' Ms Gallagher said.

''The Commonwealth has accepted responsibility for remediation in a number of cases on an ad hoc basis.''

There are thought to be about 114 former landfill sites that are contaminated, causing problems for the city's expansion..

A stormwater project, the North Weston Ponds, in Canberra's new Molonglo, doubled in price to $43 million after 90,000 tonnes of asbestos-tainted soil was uncovered.

A spokesman for the Department of Regional Australia and Local Government said that a national plan was being developed for the management of buried asbestos.

The department did not answer questions about the progress of the talks with the ACT government.

''The Commonwealth remains committed to finding ways to address asbestos management issues nationally,'' the spokesman said.

''We established the Office of Asbestos Safety in September 2012 to respond to the broad-ranging Asbestos Management Review and to develop a national strategic plan by 1 July 2013.''