Federal Environment Minister Ian Campbell has admitted defeat in his fight to return cattle grazing to Victoria's Alpine National Park.
Senator Campbell has been trying to overturn a Victorian Government ban on grazing in the park that was introduced this year.
He offered the State Government $15 million for the park if it overturned its ban.
But the Victorian Environment Minister, John Thwaites, has refused to budge on the issue.
Senator Campbell says he will now start a process to heritage list a Greater Alpine National Park stretching from Victoria through New South Wales to Canberra.
But he admits the listing will not allow the return of cattle grazing.
"In the meantime it's a fight that has to be put on hold. I strongly believe that alpine cattle grazing is an intrinsic part of the Australian culture," he said.
"I don't see any reason why it has to end.
"I do see that it can be curtailed and it can be done in a more environmentally sound way - that's what my plan's about - but I realise I'm bashing my head against a brick wall."
Senator Campbell says the payment remains on the table.
"The Victorians have made it quite clear that they're not going to allow that [grazing to continue], that is something that could only happen in the future if a future Victorian government changes its mind," he said.
"I'm now going to move on. I'll leave the $15 million on the table in case they see commonsense."
The Victorian Government has welcomed the Federal Government's backdown.
Mr Thwaites says Senator Campbell has been playing politics on the issue.
"He was offering things he knew he couldn't deliver, now we are going to have a joint approach, which I think is good, we're going to seek national heritage listing and hopefully world heritage listing," he said.
Meanwhile, the head of Environment ACT, Maxine Cooper, has called on the Federal Government to adjust its priorities in relation to management of Australia's alpine national parks.
Dr Cooper says the Federal Government should be investing in conservation and research, not a new administration plan.
"For instance in the ACT you've got recovery programs for the northern corroboree frog, the brush tailed wallaby, those kinds of programs are very much needed," she said.
"Further protection of our delicate eco-systems in their entirety is what we would like to see."
Dr Cooper says the proposal to bring together parks in Victoria, New South Wales and the ACT lacks depth and was pieced together without any consultation.
"We would prefer to work through the Australian Alps liaison committees and the arrangement that is currently in place," she said.
"We would actually prefer that the Commonwealth who withdrew their contribution to that particular arrangement three years ago reinstate funding for that so that any deployment of funds is done in a cooperative way according to priorities."