Transport Minister Steven Joyce says Auckland Council needs to look at whether the CBD rail project or another harbour crossing is the most important - as the country can't afford both.
The parties are at loggerheads about the future of the rail project, with Mayor Len Brown saying the 3.5km tunnel will transform the central city and boost public transport use, and the Government remaining adamant the benefits have been exaggerated.
Mr Joyce told Morning Report the rail loop may well go ahead one day but it is not urgent.
He says the region needs to take a step back, and make a choice not only on what is built but the order in which it is done.
Mr Joyce says the harbour crossing project would cost $3 - $4 million and the two projects are not affordable at the same time.
Len Brown says the council is going ahead and securing the rail route, and getting consents, as he believes the rail project is more urgent than another harbour crossing.
Mr Brown has said the project will continue and he expects the tunnel to open in 2017.
Councillors certain of rail tunnel's merits
Auckland councillors say they can prove the value of an inner-city rail tunnel despite the business case for the project being rejected by the Government.
The council says Auckland's population and public transport usage will grow faster than the Government believes, and that Britomart will be at capacity in two years.
One of two councillors who sits as a director of Auckland Transport, Chris Fletcher, says the council is united on the project.
She is certain the Government will come to the party once designation and consenting work has been undertaken.