Sydney (AFP) - A Chinese-Australian investment consortium's plans to build a multi-billion-dollar mega-casino on the Gold Coast were canned by the state government Tuesday, following an outcry from locals over the size of the complex.

The ASF Consortium, comprising a Sydney-listed Chinese-Australian investment firm and two state-owned Chinese companies, had proposed a A$3 billion (S$3.26 billion) so-called integrated resort in the tourist hotspot.

The waterfront development on the Gold Coast Spit was to have included multiple hotels up to 45 storeys high as well as retail, entertainment, residential and conference facilities.

Community and environmental groups were critical of the proposal, which came after ASF was chosen as the preferred tenderer in 2014, saying it would hurt local entertainment and gambling venues in the area as well as impact local wildlife.

"Like many Queenslanders, I have enjoyed visiting the Spit for decades," Queensland Premier Annastacia Palaszczuk said in a statement as her state government announced it had "terminated the proposed ASF development".

"We need to ensure that character is preserved for future generations... What the Spit really needs now is a master plan to revitalise it and increase its benefit to the Gold Coast as a community asset."

Palaszczuk said the replacement - a community-led master plan for the area - did not rule out a future casino complex in the Gold Coast.

But it would keep to local guidelines for buildings to be at most three storeys high and low density.

"It also helps get the balance right between protecting environmental and community values and allowing appropriate commercial development," state Infrastructure and Planning Minister Jackie Trad added.

A response from ASF was not immediately available.

The announcement is the second blow recently for the casino sector in Queensland.

Hong Kong billionaire Tony Fung last year shelved the casino part of a A$8.15 billion Aquis project near Cairns, the gateway to the iconic Great Barrier Reef, citing a softening Asian gambling market.