A coalition-initiated space observation program has been cut by the Albanese government as a budget repair measure.
But critics say the decision demonstrates a lack of understanding about the importance of the sector.
Industry Minister Ed Husic confirmed the government would not proceed with the national space mission for earth observation program, established to build and launch four satellites between 2028 and 2033.
The cost of the program over its life had been estimated at more than a billion dollars and the government decided to "re-prioritise" $452.4 million to help address budget costs in the next three years.
About 30 staff are expected to be impacted and public servants will be re-assigned while contractors will have their existing terms honoured.
Liberal deputy leader Sussan Ley slammed the decision as a "national disgrace" which would make Australia weaker and impact the economy.
"In cutting this program Anthony Albanese has presided over one of the single worst industrial policy calls in Australian history," she said.
"As the space industries of other nations are lifting off, Australia's is being taken off the launch pad."
Australian Strategic Policy Institute senior analyst Malcolm Davis said the decision was a "bad sign" that the minister did not understand the importance of outer space to the nation.
"Commercial space has to lead, dragging government behind it, but these sorts of bad decisions do make it hard," he wrote on LinkedIn.
Mr Husic said the government valued the role of the sector and provided $34.2m for the Australian Space Agency in the most recent budget.
"Not only does the sector draw on significant support from across portfolios, but space-related firms will also be able to access capital through our $15b national reconstruction fund, plus our newly announced $392m industry growth program," he said.
