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Wallaby work will not get government funding this year, so a "disappointed'' Otago Regional Council will have to reassess its options regarding the pest.
The council, along with the Ministry for Primary Industries and other councils and crown entities, made a joint bid to Government for wallaby control funding, saying it had become a national issue.
The recent Budget did not contain funding for the pest.
Cr Bryan Scott said at a committee meeting yesterday anyone who read the Government's decision would be disappointed.
Council chairman Stephen Woodhead said he travelled to Wellington a couple of months ago to push for national funding for the pest.
Conservation minister Eugenie Sage and Biosecurity Minister Damien O'Connor expressed "strong support''.
"They were pushing behind the scenes in the Budget, but the Budget was massively oversubscribed.''
At a recent meeting with Environment Canterbury about how to deal with the pest collaboratively, the Otago council was "fobbed off'' with a memorandum of understanding rather than more a substantial commitment to stopping the spread of the pest, he said.
"We had an unwilling party on the other end.''
Council operations general manager Gavin Palmer said it needed to decide what to do regarding the pest in the wake of the Government's decision.
He was working through the memorandum of understanding with Environment Canterbury, he said.
Cr Andrew Noone said the council needed to "play hard ball'' with the memorandum and Dr Palmer needed to go as "hard as he can'' in getting action from Environment Canterbury.
Cr Graeme Bell said people in Maniototo were disappointed there was no funding in the Budget.
Between 2011 and 2016, the Otago council responded to 12 wallaby incidents. This increased to 128 between 2016 and 2018.
The animals have long been established in Canterbury.
In the North Island, the dama wallaby species is established in Bay of Plenty and has spread to Waikato.