Mr Marshall, who is chairman of the tourism industry advisory council of the Canberra Business Chamber, said he was very disappointed to learn on Wednesday that the $8 million set aside to get the project to investment-ready stage had been removed from the coming budget.

He dismissed Mr Barr's suggestion that the project had been shelved because of lack of interest from the Commonwealth, saying the federal government wanted a business case and detailed proposal before it could make a financial commitment.

"There has been meetings with commonwealth government bureaucrats and some members of parliament and there is definitely an interest, but they are saying they would need to have substantial documentation in order to make an assessment. It's certainly in the Commonwealth's benefit that we have a centre of international significance here.

"And if we want to become one of the world's great national capitals, virtually every major national capital of the Western world have modern, innovatively designed convention centres."

A world-class convention centre would drive economic growth, create jobs and increase interest in international fights to the city.

He believed the decision was driven by the ACT's tight budget, but while he had sympathy for the budget position, delay would set the project back years.

"I don't think, quite frankly, Andrew Barr is against the convention centre. I think they're looking for savings."

Darwin, Alice Springs and the Gold Coast had "far more modern convention facilities than the nation's capital and I think that's a very telling", he said.

But Unions ACT secretary Alex White said it was "typical of sections of Canberra's business community to ask for government hand-outs to fund private sector projects". If a commercial case for an upgraded convention centre existed, the business sector should fund it, "rather than continually demand Canberra taxpayers to do so", he said.

Liberal senator Zed Seselja said Mr Barr's blame of the federal government was "an absolute cop out".

Speaking at a press conference with Prime Minister Malcolm Turnbull on on Wednesday, Mr Seselja said he had been lobbying for the centre and said the commonwealth expected Mr Barr to put together a fully formed proposal.

"I've been lobbying for the convention centre at a federal level," he said. "It's not an easy thing to thing to be asking for potentially hundreds of millions of dollars from the commonwealth, but the only way we can have success in getting the government to make a decision like that is genuine commitment at an ACT level.

"[Mr Barr] was meant to put together a more fully formed proposal and now he's pulled out, saying 'Oh, we want to see where the feds are going first.' The fact that he's effectively shifted the money to light rail tells the story."

Mr Seselja said he was disappointed Mr Barr was walking away from the project, which would benefit Canberra.

But Mr Barr said neither the Abbott nor Turnbull governments had shown enough interest to justify spending $8 million.

"If the senator [Zed Seselja] has been lobbying for a national convention centre, then he either isn't doing a particularly good job or the federal government is so cash strapped that it can't invest in major projects," Mr Barr said.

The project was not off the table and the ACT government would continue to discuss the idea with the commonwealth, he said.

The Greens also want a convention centre, with Greens minister Shane Rattenbury saying Canberra needed a bigger replacement for one of Australia's smallest and oldest convention centres.

"I'll be continuing to advocate, alongside my colleagues, for this project to move ahead," Mr Rattenbury said.

The ACT's Liberal opposition leader Alistair Coe blamed the Barr government's "inability to control expenditure" for dropping the convention centre.

"Whilst [Mr Barr] claims it is due to the commonwealth, in reality, the commonwealth's position has not changed," Mr Coe said.

"Andrew Barr is simply playing the 'blame the commonwealth' card because the truth reflects poorly on his financial management."The ACT government started backing away from the project in 2014, citing the cost of the Mr Fluffy asbestos buyback. But Mr Barr said then it would keep its promise to get the project to investment-ready stage.

In 2015, local architects Guida Moseley Brown and Rome-based architect Massimiliano Fuksas were chosen in a design competition to develop a preliminary design.