Auckland's light rail project is officially an election issue after the Government gave up on trying to reach an agreement on which plan to back.

Transport Minister Phil Twyford announced the Auckland Light Rail process had "ended" this morning.

"Despite extensive cross-party consultation, Government parties were unable to reach agreement on a preferred proposal," Twyford said.

"The future of the project will now be decided by the government following September's general election."

While the process would continue to be considered by officials, one of the two consortia which had submitted a bid refused to say with certainty whether it would continue to pursue the contract

"We are still digesting today's decision and, therefore, are not in a position to comment," a spokesman for NZ Infra said.

NZ Infra is a joint venture between the New Zealand Super Fund and a Canadian pension fund.

Auckland mayor Phil Goff said the result was disappointing and frustrating.

"I am disappointed with that outcome, as I am sure many Aucklanders are too.

"It is frustrating that after three years, disagreement within the coalition has held this process up.

"It's now less than 90 days until the general election and we expect the incoming government to act quickly and decisively to outline its proposal to get light rail built.

"Tāmaki Makaurau needs a decision on light rail to meet growth on the Auckland isthmus, support intensification of housing, and head off bus congestion due to occur within three to four years - light rail needs to be in place before then," the Mayor said.

Cabinet had been considering which of two bids it had received to select as a preferred partner. One had been developed by the New Zealand Transport Agency, the second was from NZ Infra, a joint venture of the New Zealand Super Fund and CDPQ Infra - an infrastructure subsidiary of the Canadian pension fund, Caisse de dépôt et placement du Québec (CDPQ).

Twyford said both bids were "credible and deliverable".

"Either would have created hundreds of jobs and resulted in an Auckland metro that offered Aucklanders a 30-minute trip from the CBD to the airport."

But the plan failed to receive the backing of Cabinet, with NZ First believed to be unwilling to support moving forward.

Twyford said the Ministry of Transport and the Treasury would now report back on which was the best option to delivered by the public sector.

"The Ministry of Transport and the Treasury will also engage with NZ Infra and Waka Kotahi about how work done on this project can support the next phase," Twyford said.

The Canadian company which had partnered with the Super Fund described the news as a "significant disappointment".

"We gathered the best international light rail experts to put forward an integrated, inclusive and sustainable project that had the potential to spearhead the transformation of Auckland," CDPQ Infra managing director Jean-Marc Arbaud said:

"Our proposal was fully funded, deliverable and offered clear value for taxpayers. We diligently followed every step of the rules and process designed by the Ministry of Transport.

"It is disappointing that the process has been cancelled but we respect the decision of the New Zealand Government."

Matt Whineray chief executive of the NZ Super Fund said when the organisation entered the process it knew the outcome would be "uncertain".

Work on the light rail decision was part of the confidence and supply agreement between Labour and the Green Party.

Associate Transport Minister and Green Party transport spokeswoman Julie Anne Genter said she welcomed the decision to run the process through the public sector, rather than having Cabinet select the preferred option.

"With the twin track process over, detailed planning work on light rail can continue and key design and financing decisions can be taken quickly after the election," Genter said.

"Light rail will future-proof Auckland's transport network and ensure that the city can support a rapidly growing population. We have to get this right, so this is a good move at this time."

Matt Whineray, chief executive of the NZ Super Fund, said: "We entered into this process knowing the outcome was not certain. As Aucklanders, we are very proud of the innovative and high quality proposal we produced with the expert support of our partner CDPQ Infra.

"We have valued the engagement we have had with the Ministry of Transport and other stakeholders over the last year and thank them for their efforts and assistance. We remain committed to seeking opportunities for the NZ Super Fund to invest in New Zealand, including in large-scale infrastructure, and look forward to utilising the knowledge and expertise we have developed on other projects."