Te Papa Museum says building a new museum and storage space in south Auckland is no longer a priority, after being denied funding for the project in this year's Budget.
The decision comes despite documents from last year showing the museum considered the project to be of great strategic importance.
It's the second time the museum has been denied funding for the project - a 2015 bid was also turned down by the government at the time.
Building a facility in Manukau was not a current priority for Te Papa, said chief executive Geraint Martin, after the government indicated in May it would like the museum to prioritise other work.
"Te Papa is committed to fulfilling its role of serving all New Zealanders.
"We have built strong relationships in the wider Manukau community and we look forward to continuing to strengthen these, to ensure Te Papa's work connects with as many New Zealanders as possible."
Emails between the Ministry for Arts, Culture, and Heritage and the museum show a business case was being developed for the facility last year.
A presentation made to the Ministry for Arts Culture and Heritage in April last year included the project as one of its three "big strategic capital projects", and it was listed as a strategic priority in the museum's statement of performance expectations.
Manukau Ward councillor Alf Filipaina had been working on the project since the land was gifted by the council for the site in 2013.
It was disappointing the project had once again not been given funding through the budget, he said.
"There has been a lot of consultation with our community, and I know our community was looking forward to Te Papa Manukau coming to fruition, definitely."
He said it meant his constituents would not have the opportunity to see exhibitions from their own culture, or the opportunity to see exhibitions from around the world.
He had not heard from the museum since the budget announcement in May to see what the next step was, and was worried the decision not to fund it this year might mean the funding would never come.
However, there had been plenty of opposition to the museum moving its collection to Auckland for storage.
Last year Associate Minister for Arts, Culture, and Heritage Grant Robertson was bombarded with letters about a proposed restructure. Within the correspondence were several mentions to the Te Papa Manukau proposal.
"I am a Ph.D candidate in biology in the USA and was shocked to hear of the upcoming mass trashing of the national natural history museum through firing specialist staff required to maintain collections, [and] the move of the museum's collection to an area where volcanic activity may destroy specimens," one read.
"It has come to my attention that the 1.5 million natural history specimens plus about 0.2 million cultural items will be shifted from their current safe storage ... to a warehouse surrounded by volcanoes, 500 miles to the north," said another.
Te Papa [https://www.rnz.co.nz/news/national/220916/plans-unveiled-for-auckland-branch-of-te-papa-museum
first announced it would like to build a new branch in Manukau in 2013], on land donated by the council.
In October an Auckland Council spokesperson said Te Papa and the council were working together to bring to fruition the new museum, which would have a unique identity connected with the whakapapa and cultural heritage of the Mana Whenua, Pasifika people and other ethnicities.