Students at the University of Western Australia (UWA) say the decision to can controversial Danish academic Bjorn Lomborg's Australian Consensus Centre is a win for academic integrity and common sense.

The Australian Consensus Centre was going to be set up with the help of a $4 million Federal Government grant, but University Vice Chancellor Paul Johnson last night said the proposed centre was untenable and lacked academic support.

UWA student guild president Lizzy O'Shea said students were concerned about the impact the centre, inspired by self-proclaimed "sceptical environmentalist" Dr Lomborg, could have on the university's reputation.

"It's a really good sign as far as community action goes that if enough people have mobilised against something, and don't support it, that people will change their minds," she said.

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"The fact that we had international partners saying they wanted to pull out because of the association. So the reputational damage was probably the main complaint.

"There are a number of people who take issue with Lomborg's methodology, and with Lomborg's sort of research standing.

"The example that I use is there was a unit at UWA that used to use Lomborg's book as an example of bad science, and what not to do for students, and so a primary concern was the fact that he would be allowed to be associated with UWA when we hold our first year students who are 17, right out of high school, to a higher standard than that."

Education Minister Christopher Pyne has told newspaper journalists he is seeking legal advice about the university's decision to hand back the funding, but he said he would find another university to host the consensus centre.

Mr Pyne on Friday tweeted that UWA's decision marked "a sad day for academic freedom".

Agriculture Minister Barnaby Joyce said the decision did not give university students enough credit, to decide for themselves which facts are relevant.

"I like an exciting world where you can hear challenging points of view, even if you disagree with them," he said.

"Universities, they're supposed to be the crucible of allowing people to investigate and ponder an idea and come up with their own conclusions."

Meanwhile, National Tertiary Education Union's WA division secretary, Gabe Gooding, said members would be relieved and rejected suggestions that Dr Lomborg's views were being censored.

"Those people who were particularly supportive of it will be painting this as censorship but it's absolutely not censorship, it's about the academics being really concerned about academic standards and the integrity of the institution," Ms Gooding said.

"It's never been about shutting down an alternative view."

Labor's higher education spokesman Senator Kim Carr said the Government's support for the centre was politically motivated and the grant for the think tank was an inappropriate use of public money at a time when other universities and research institutes have had their budgets cut.

"What this government has to understand is that the Australian research program is not the plaything of individual ministers, nor a slush fund for the Liberal Party," he said.

"This is clearly not an appropriate way to fund research in Australia.

"We need to protect the integrity of the research program to ensure that it is not subject to the political fortunes of individual ministers or the political prejudices of the Prime Minister."