The Victorian government says it has abandoned its plan to sell its stake in the Snowy Mountains Hydro scheme.

The move comes after Prime Minister earlier today announced the Federal Government would no longer put its 13 per cent shareholding up for sale.

The announcement was followed a short time later by the NSW government declaring it has also abandoned its plan to sell its 58 per cent stake.

NSW Premier Morris Iemma said the sale was now impractical following the commonwealth's decision not to sell its 13 per cent stake in the project.

"The commonwealth's reversal now makes the sale impractical," Mr Iemma said in a statement.

Mr Iemma said the federal government's decision had fundamentally changed the nature of the planned sale through a sharemarket float.

"NSW expected that Commonwealth, Victorian and NSW governments would jointly proceed with the sale," he said.

Mr Howard earlier said: "The commonwealth has decided to withdraw from the sale of the Snowy Hydro."

"We will no longer have our 13 per cent share on offer," he told reporters.

The federal government initially decided to sell its 13 per cent interest in the Snowy scheme after the NSW and Victorian governments announced they would sell their larger stakes.

But the proposed privatisation has come in for strong opposition from the public and some government MPs, and prominent Australians have also spoken out against the plan.

Mr Howard said the government had been swayed to change its mind.

"There is, for whatever combination of reasons, there is overwhelming feeling in the community that the Snowy is an icon, it's part of the great saga of post world War II development in Australia," he said.

"It conjures many stories of tens of thousands of European migrants coming and blending with each other and in the process of working on the Snowy becoming part of this country. And people feel that.
Patty