The decision will be a blow for mining company Adani, which needs the connection to the port to support its plans for a new coal mine in Queensland's Galilee Basin.

Chief executive Andrew Harding said Aurizon continued to support the development of the Galilee Basin.

"When developed, it has the potential to provide a major boost to the national economy and create thousands of jobs in regional Queensland," he said.

"We believe Aurizon can play a key role in helping facilitate a multi-user, open access rail solution for the various new mines in the region."

Mr Harding said Aurizon believed it could play a key role in helping to facilitate a "multi-user, open access rail solution" for various new mines in the region.

"However, while we are in ongoing discussions with several Galilee Basin mine proponents we have not yet progressed to definitive contractual arrangements with any proponent," he said.

"Our NAIF application is, in part, predicated on having customer contracts secured.

"Given this is unlikely to occur in the near future, we believe it is prudent to withdraw the NAIF application."

Mr Harding said if market circumstances changed, and discussions with potential customers progressed to commercial arrangements, Aurizon would look at all possible financing arrangements to develop the rail line.

Green groups had intensified the pressure on Aurizon over the mooted rail line, which if built would assist the Adani Carmichael mine and other future mines in the region, in moving coal to Abbot Point.

Queensland Premier Annastacia Palaszczuk wrote to Prime Minister Malcolm Turnbull in December last year to veto an almost $1 billion concessional loan to Adani, which would have allowed it to build its own rail line.

The $5 billion NAIF, created to turn the country's north into an "economic powerhouse", was yet to grant any concessional loans to a Queensland project.

This week, Ms Palaszczuk intensified her language in relation to Adani, calling for the company to prove it was meeting its milestones in creating jobs and securing finance.

Federal Labor leader Bill Shorten has also shifted his rhetoric on Adani, accusing it of offering "fake jobs", a claim that was disputed by Adani, which said it had already created 800 jobs.

Last month, Deputy Premier Jackie Trad said there was "no active application for funding for a rail line between the Galilee Basin and the Abbot Point coal terminal".

At the time, an Aurizon spokeswoman said the company submitted its application to NAIF in March 2017 and dialogue had continued with NAIF.