Victorian Premier Daniel Andrews said the event – which Jersey and Guernsey always participate in – was “all cost and no benefit”, with an initial price tag of £1.4 billion having risen to over £3.64 billion.
The Commonwealth Games Federation described the decision was “hugely disappointing”.
It is not clear whether the Games will be able to go ahead. If the Games were to be cancelled, this would be the first cancellation since World War Two.
Graham Huelin, Secretary General of the Commonwealth Games Association Jersey, said that the decision had come as “a complete surprise”.
“It’s too early to say what’s going to happen from here.”
He added that there may be some challenges in terms of securing funding, but that athletes are “only really at the beginning of the Games cycle”. They are still encouraged to join the pathway on the assumption that a Commonwealth Games will take place in future.
The last Commonwealth Games was held in Birmingham in 2022. Jersey sent 27 athletes, who competed in eight sports. The island unfortunately did not receive any medals.