A Southern Memorial Park was proposed for Tuggeranong as far back as 2008, but the project missed out on capital works funding in the last five ACT budgets.

With burial space on the southside to run out in 2018, the territory government opted in 2015 to instead to expand the Woden cemetery, extending its life by at least a decade.

However, with the next stage of light rail heading to the Woden town centre, annexing three hectares of space from the neighbouring Eddison Park for more burial plots became a somewhat controversial proposition.

With residents' groups railing over loss of green space in the city centre, City Services Minister Meegan Fitzharris flagged a rethink of the expansion last year.

Now Ms Fitzharris says the government has formally dropped the expansion.

"The government will continue to explore the Southern Memorial Park option to ensure that a full range of burial and interment services can be provided across Canberra," Ms Fitzharris said in a statement.

However Canberra Liberals planning spokesman Mark Parton said time was running out and he was "extremely concerned" by the delays in the project.

"The minister did not commit to anything more than ongoing examination of southern memorial park," Mr Parton said.

"The government has been examining that proposal for years and it is time to act."

Greens crossbencher Caroline Le Couteur said the proposal had been around since her first stint in the Assembly in 2008-2012, and urged the government to fund the southern cemetery in the upcoming budget.

"It is an example where we have to do better in planning for the future," Ms Le Couteur said.

Mr Parton said southsiders had a right to be "extremely disappointed" if the cemetery was left out of the budget.

"How many more vitally important infrastructure projects do we have to see shifted to the backburner before there is outrage?" Mr Parton said.

Canberrans won't be without a place to bury their loved ones, as Gungahlin's cemetery has at least 50 years of capacity.

It is understood the Southern Memorial Park project was placed on hold due to unresolved issues over how cemeteries maintenance is funded.

The ACT Cemeteries Authority has an unfunded liability of more than $18 million, because of the need to maintain graves in perpetuity despite falling burial rates.

Cabinet documents released under the 10-year rule showed a state-run crematorium was proposed to help reduce that deficit and pay for a new cemetery, but the plan did not have the backing of treasury officials.

However the ACT government now appears to be seriously looking at a second crematorium.

It's unclear though whether a new crematorium would be run by the ACT Cemeteries Authority.

The ACT government said it would look at options for the future management of cemeteries and crematoria, despite an inquiry recommending the authority should continue to hold this responsibility.

Ms Le Couteur, who was part of the Greens bloc that opposed the construction of a new crematorium in 2010, said she was still "not keen" on the idea but her views had been "tempered" by spending a year on the ACT Cemeteries Trust board.

"That taught me a lot about the economics of running a cemetery. A crematorium is not my most preferred option but I do appreciate the financial imperative behind it," Ms Le Couteur said.

However she said natural burials were her preferred option, as they required minimal infrastructure and were better for the environment.

The government will also seriously consider a proposal to start recycling graves, by undertaking a study into the cost and feasibility of replacing the perpetual tenure options currently in place.

However the controversial proposal would be subject to intensive community consultation, the government noted, and 'for perpetuity' would continue to be a tenure option.