Scott Morrison?s rejection of Pep11 branded ?cynical? as government pushes on with other gas projects

The federal government's decision to end a plan to drill for gas off the New South Wales coast has been labelled a cynical political move ahead of the next election.

Scott Morrison made the announcement at the Terrigal surf life saving club on Thursday, telling reporters he had overridden resources minister Keith Pitt to kill the petroleum exploration project, known as Pep11.

"The reason why we're here today, and that is to announce, that after careful consideration, the government has taken, through my own decision, the first step to formally reject an application for the petroleum export (sic) permit, known as Pep11," Morrison said.

Morrison cited widespread community opposition, a lack of financial support underpinning the project and insufficient justification to extend the permit as reasons for the refusal, saying he had "listened carefully".

But in a separate statement, the government said it was still forging ahead with gas developments in other parts of the country as part of its gas fired recovery plan.

"The Morrison government is working to unlock investment in Australian gas including through a $220m commitment to the Beetaloo strategic basin and $15.7m in support for the North Bowen and Galilee basins," it said.

As community groups such as Save Our Coast celebrated the Pep11 decision as a victory for people power, observers say the government is trying to thread the needle between backing the gas industry and losing support ahead of the next election.