Kingston and Barton Residents' Group president Richard Johnston said the group was hoping to get the project back on the rails.

"I mean we have to wait and see what happens. I think we've come to the view with a couple of bad experiences over the last few years, that trusting a large complex project to a commercial developer really doesn't work," Mr Johnston said.

"We're likely to get a better outcome if the government is running it, and hopefully the government is more likely to listen to the community's views."

The ACT government tore up the contract with Geocon, which had been signed in 2019, for the Kingston Arts Precinct, a 40,295-square-metre site around the heritage-protected Kingston powerhouse. The government's Suburban Land Agency will now deliver the project.

Mr Johnston said he hoped the decision to drop Geocon from the project would mean the precinct could better reflect a masterplan for the area drawn up seven years ago, before the site was first put on the market.

"We have no idea what the [Suburban Land Agency's] intention is but in my view the best starting point, the point we should have all been working from, is the 2014 masterplan, which is actually quite different in many respects to what Geocon's architects have been pushing," he said.

"It's a bit hard to see how you can just pick up what they've been doing and somehow make it a much better outcome. From my point of view, it really is a matter of starting again and really consulting meaningfully this time around, but using the masterplan as the starting point."

The Suburban Land Agency will review the timelines for the project, but it wants the area to be completed by 2025, which will be 10 years after the precinct - set to include purpose-built arts facilities alongside residential developments - was put out to tender.

Consultation with the Canberra Contemporary Arts Space, CraftACT, M16 and PhotoAccess to move into the precinct is continuing; the government is also working with the Canberra Glassworks and Megalo, which are already located in buildings at the site.

The government is also working with representatives from the Aboriginal and Torres Strait Islander Arts Network. ArtsSound FM had previously been part of consultations, and the Canberra Potters' Society pulled out of negotiations in 2017.

Suburban Land Agency chief executive John Dietz on Friday said the decision to cancel the contract was confirmed by the agency's board "relatively recently" but said Geocon had put forward a "really good design".

"It was taking too long. The progress we were seeing wasn't as fast as we needed it to be. It is so important, it is so critical for us, that this is a premier result. It's something we want Australia to be proud of, and we weren't seeing that coming as the time that we needed it to," Mr Dietz said on ABC radio.

Mr Dietz said his agency would re-establish the community panel for the project, and said engagement was the best way to resolve ongoing concerns about the site's heritage.

The precinct could still be delivered within its original $78 million budget, Mr Dietz said.

"I would hope that by 2022 we've got a good development application that fully addresses the mix of different uses and the mix between private and public spaces," he said.

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