The University of Western Australia (UWA) cancelled the contract for Bjorn Lomborg’s Consensus Centre on May 8 after a "passionate emotional reaction" to the plan.
In a statement, UWA Vice Chancellor Paul Johnson said the creation of the centre had attracted "mixed reactions" from staff, students and the general public.
"The scale of the strong and passionate emotional reaction was one that the university did not predict," he said.
The strong opposition to the centre had placed the university in a difficult position, he said, and that the lack of support meant it could not deliver "value for money for Australian taxpayers".
Read more about Bjorn Lomborg and his Concensus Centre here.
Federal Education Minister Christopher Pyne tweeted: "What a sad day for academic freedom when staff at a university silence a dissenting voice rather than test their ideas in debate."
UWA student guild president Lizzy O'Shea said the decision is a win for academic integrity and common sense. She said students were concerned about the impact the centre 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.
Greens Senator Rachel Siewert said UWA made the right decision.
"It was very clearly the Government's design to get someone in place that was running a different argument on climate change, to try and suggest that climate change isn't as significant an issue as it is," she said.
UWA Academic Staff Association vice president Professor Stuart Bunt denied the move was censorship. "The difficulty is [Lomborg] is neither a scientist or an economist, he's a political scientist. [He] would be using the name of the university, to put what are largely political opinions, rather than evidence-based statements, using the university's name."
The National Tertiary Education Union's WA division secretary, Gabe Gooding, agreed.
"Those people who were particularly supportive of it will be painting it as censorship but it's about academics being really concerned about academic standards and the integrity of the institution," she said.