Ashburton District Council has cancelled the sale of water rights to bottled water company NZ Pure Blue.

Photo: RNZ / Sally Murphy

The water rights were part of the sale of Lot 9 in the Ashburton business estate, which comes with a resource consent to extract up to 45 litres of water per second from the town's aquifer, through to 2046.

Protest marches and meetings have been held to oppose the deal, and earlier this month a 40,000-signature petition calling for the sale to be stopped was presented to the council.

Ashburton mayor Angus McKay said the decision to call off the sale was made by councillors late last week after the proposed buyer failed to meet council deadlines for information about how they intended to run a water bottling plant from the site.

Mr McKay said the council had twice in the past year agreed to extend the due diligence timeframe for the potential purchaser.

A further extension was requested until 30 September but before it was granted the council wanted to know more about the specifics of the operation.

Mr McKay said the purchaser had not provided the information, which gave enough cause for concern to cancel the agreement.

He said the council had wanted confirmation that the plant would use water bottles rather than water bladders, which the council believed would ensure more local jobs at the plant, and that it would pay to relocate the town's train shunting yard.

Residents opposed to the plan formed the Bung the Bore Action Group to try to stop the sale going ahead.

Jen Branje, who led the group, said the land could still be sold to another buyer so it was important the attached resource consent to take water was abandoned.

The cancellation of the deal gave opponents time to examine the consent further, she told Morning Report.

"That was always our main concern ... the take of water and the consent to take that water."

"They could still sell Lot 9 to another buyer and still have that consent attached."

"We always said that even if our council wouldn't come to the party, that we've really achieved something here in that New Zealanders are talking about water and that's really important."

Mr McKay said any decision on taking up a new offer for the town's controversial water bottling site would go on hold until after the local elections in October.

"We do have to be careful so close to an election signing deals of great significance."

The present council would not consider any other offers for the site and it would be up to a new council to decide what to do with the land, he said.