Lands Minister Tony Kelly was forced to defend the Government's role in the proposed development in Parliament when Liberal MP Catherine Cusack questioned him about future plans for Killalea.

Mr Kelly said Killalea was "a perfect example of why the Crown Lands Act has been and continues to be an example of excellent governance".

"This process allowed for all appropriate due diligence to be completed, for all appropriate planning considerations to be investigated and for the maximum amount of community involvement in decision-making," Mr Kelly said.

"Killalea Coastal Investments was not immune to the global financial crisis, and as a result ... it is no longer in a position to continue planning for the ecotourism development at Killalea.

"Accordingly ... the development is officially shelved - permanently."

The deal reached between the Department of Lands and Killalea Coastal Investments, a subsidiary of Mariner Corporation, to terminate the project, remains confidential.

On Tuesday Mariner issued a statement which said the carrying value had been adjusted in the company's accounts, but gave no indication what that value was.

Greens MP Sylvia Hale said residents had a right to be sceptical about the change of mind about the development "that does not appear to be a change of heart".

"Quite simply the developer went broke, so for local member Matt Brown to say that views from both ends of the spectrum have been heard and respected is simply insulting," Ms Hale said.

"The only views listened to by the Government in supporting development of Killalea were those of its developer donor mates."