Promoter for the event Cattleyard confirmed on Wednesday the festival would return to the capital in 2019, but said details of a new venue would not be revealed until next week.

On Tuesday, University of Canberra vice-chancellor Deep Saini told an ACT assembly hearing a mutual decision had been reached with Cattleyard to end the contract after almost a decade hosting Groovin the Moo.

The revelation came as Canberra Liberal Andrew Wall questioned how the university's zero tolerance policy on drugs could be reconciled with the Australian-first pill testing trial conducted on campus at the festival in April.

"The university felt with the growth in the campus ... the place was no longer fit for purpose so we approached the organisers," Professor Saini said.

"This year was the last year ... It may happen elsewhere but it will not be on [our] campus."

While Professor Saini conceded holding the trial could have sent a mixed message about drug use, he defended the university's decision to allow pill testing as a harm minimisation initiative, and stressed it also had the backing of the ACT government and police.

The trial, which only gained final approval at the 11th hour, was widely hailed as a success by medical experts, picking up two potentially lethal substances and seeing two in five participants modify their planned drug consumption.

A second trial at the Spilt Milk festival, to be held at Commonwealth Park in Canberra next week, was recently blocked by the federal government agency that controls the land, amid warnings from the Canberra Liberals that it would condone drug use.

A University of Canberra spokeswoman said capital works during current campus development were behind its decision to drop Groovin the Moo, but the university had enjoyed a fantastic partnership with the festival for the past nine years.

"The university is a proud supporter of live music and is looking forward to hosting quality Australian and international acts at the UC Refectory," she said.