THE federal government will tell business leaders that it is putting on hold plans to devolve to the states power to deal with environmental approvals for major projects.

The decision is a major blow to business - which has claimed ''green tape'' is jeopardising projects worth many billions of dollars - and a victory for green groups that have complained about a watering down of standards.

The federal government blocked a state trial of cattle grazing in the Victorian Alpine National Park. Credit:Justin McManus

In a bid to streamline and speed up approvals, the Commonwealth started negotiations with the states after the Council of Australian Governments meeting in April for decisions to be made under state legislation. But concern about state approaches to standards has made it difficult to get bilateral agreements that are comprehensive and meet standards.

Business leaders at the pre-COAG Business Advisory Forum will be briefed on Thursday on the decision, which follows high-profile spats between Canberra and conservative state governments over environmental approvals.