Just over two months out from the ACT election, the Labor government on Friday effectively dumped the unsolicited bid put forward by the GWS Giants and developer Grocon which would have seen the Manuka Oval precinct transformed.

The $800 million "Manuka Green" proposal, if it had been adopted by the government, would have seen land around Manuka Oval developed for a hotel, serviced apartments, retail, residential and office space, while also bankrolling an $80 million to $100 million upgrade of the oval.

Mr Barr instead announced a "panel of community representatives" would advise the government on a detailed masterplan for Manuka Oval and any development in the area would now be subject to a competitive process.

The GWS Giants have not been deterred by the decision.

Giants chief executive David Matthews said they would continue to put forward a proposal that was acceptable to the community and the government.

"This in no way diminishes our enthusiasm to continue to refine and develop our plans for further consideration. In many ways it underlines the importance of delivering the world-class outcome we are all seeking," Mr Matthews said.

"The government has stated that the goal for the soon-to-be-established community panel is to help deliver a precinct that preserves the heritage-listed elements and attracts even more world-class sport to Canberra. The Giants have maintained these objectives from the beginning of the unsolicited bid process and continue to do so today."

An unsolicited bid is one not requested by the government from a proponent for unique projects of at least $10 million.

The bid has to go through a series of approvals, but the GWS-Grocon unsolicited proposal had been roundly rejected by community groups and at a town hall meeting in April due to concerns about the impact on heritage, especially the Manuka Pool, congestion in the area and the idea of a developer getting the green light outside of a competitive process.

Friends of Manuka Pool president Clive Hamilton said it was a "victory for community activism" and he was particularly scathing of the chief minister.

"It's a backdown by Mr Barr and rightly so, because from the outset he overrode the community's wishes and gave a nod and a wink to out-of-town developers," Mr Hamilton said.

"The whole ACT planning process has an unpleasant smell about it. This will save Manuka, but with an election coming up nothing will save the chief minister."

Kingston Barton Residents' Group president Rebecca Scouller said people had serious concerns with the unsolicited bid process and the scale of the development.

"We welcome the news of a community panel and renewed master plan with caution," Ms Scouller said.

"We look forward to seeing more detail on the community panel and look for assurances that the local residents are represented alongside users of the oval.

Friends of Manuka Pool and the Kingston Barton Residents Association last weekend started collecting signatures for a petition calling on the government to reject the GWS-Grocon proposal. More than 500 signatures had been collected in three days but more telling was the antagonism towards Mr Barr, Mr Hamilton said.

"People did not have their baseball bats out for Labor, they had them out for Andrew Barr," he said.

Mr Barr said some development at Manuka Oval was necessary to ensure it remained world-standard, but the GWS-Grocon proposal had been "outside community expectations".

Mr Barr's office was asked if that meant the GWS-Grocon proposal was dead and buried.

The response was: "No, it means the community reference panel will determine a new masterplan for the area, and the Territory Plan amendments that would be required, and then GWS would be eligible to submit a proposal under that framework in a competitive process".

Mr Barr's statement did not spell out that the government had rejected the unsolicited bid. However, the spokesman confirmed that was the case: "As it stood, effectively yes".

Mr Barr acknowledged the unsolicited bid from the consortium had roused the community into a general discussion about the future of Manuka Oval.

"The clear message from the community is a desire to be more involved in the future of the oval and its surroundings," he said.

"The government will now establish a community panel to help inform a new, detailed masterplan for the oval and its surrounds. This consultation model has worked successfully on other government projects, such as the Yarralumla Brickworks development.

"The goal is simple: a precinct that preserves the heritage-listed elements and attracts even more world-class sport to Canberra."

Mr Barr said any development would be to "improve the oval, be high-quality, and sympathetic with its surroundings".

Opposition Leader Jeremy Hanson said the backdown on Manuka showed a government in crisis. ACT Greens MLA Shane Rattenbury welcomed the government's announcement.

Inner South Canberra Community Council president Gary Kent said he was "absolutely delighted" by the development. "We believe the oval and the precinct should be kept separate," he said.

Mr Barr said the panel would be established through an expressions of interest process to be advertised soon.