The University of Western Australia has cancelled the contract for a policy centre that was to be based on the methodology of controversial academic Bjorn Lomborg after a "passionate emotional reaction" to the plan.

The Federal Government had pledged to contribute $4 million to the Consensus Centre, a think tank that was to use methods similar to those used by Dr Lomberg's Copenhagen Centre.

Dr Lomborg has attracted controversy for suggesting that the dangers of climate change are overstated, and that society faces other more pressing challenges such as global poverty.

In a statement, UWA Vice Chancellor Paul Johnson said the creation of the centre had attracted "mixed reactions" from staff, students and the general public.

"The scale of the strong and passionate emotional reaction was one that the university did not predict," he said.

"Over the past few weeks, I have met and talked to staff, students and members of the public to hear their views, and to explain how the centre will operate within the university, the type of economic analysis it will undertake, and to correct many mistruths and misunderstandings about the centre.

"I have stated many times that it is not a centre to study climate change, that the university was not providing any direct funding to the centre, and that Bjorn Lomborg would not be involved in its day-to-day operations."

But he said the strong opposition to the centre had placed the university in a difficult position, and that the lack of support meant it could not deliver "value for money for Australian taxpayers".

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"By its very nature a centre of this sort requires co-operation of a wide range of people across many fields," Mr Johnson said.

"The work of the Australia Consensus Centre is important to Australia's future by engaging in important discussion and economic analysis about how we ensure future generations are better off than those that came before them.

"Unfortunately, that work cannot happen here."

Mr Johnson said he had on Friday spoken to the Federal Government and Dr Lomborg, advising them of the university's decision to cancel the contract and return the money to the Government.

Federal Education Minister Christopher Pyne has not responded to the ABC's request for comment, but did take to social media to share his views.

"What a sad day for academic freedom when staff at a university silence a dissenting voice rather than test their ideas in debate," Mr Pyne tweeted.

Mr Johnson last month said the Federal Government had approached the university to set up the centre.

The Federal Government funding had attracted strong criticism from the Opposition, who described it as politically motivated, something Mr Pyne has strenuously denied.

'Not about censorship': UWA staff

UWA Academic Staff Association vice president Professor Stuart Bunt said the move was not censorship.

"This isn't about censorship at all ... Lomborg is not a climate [change] denier; he believes the scientific evidence which overwhelmingly shows that climate change is happening, he just debates the economics of how we should deal with it," Mr Bunt said.

"The difficulty is he is neither a scientist or an economist, he's a political scientist.

"Once you become attached to a university, you're given a kind of credence by that university; people would expect an adjunct professor at UWA to be working in a professional manner and that their statements would be evidence-based.

"Lomborg would be using the name of the university, to put what are largely political opinions, rather than evidence-based statements, using the university's name."

Greens Senator Rachel Siewert said UWA made the right decision.

"It was very clearly the Government's design to get someone in place that was running a different argument on climate change, to try and suggest that climate change isn't as significant an issue as it is," Senator Siewert said.

"It was bad science, and I'm pleased that UWA has realised that.

"[The Federal Government] clearly had a political agenda, and it was a mistake for the University of Western Australia to go along with it."