The move on Thursday angered the Kimberley Land Council (KLC), which wants to press on with negotiations for an indigenous land use agreement by consent, and Aboriginal academic Mick Dodson, who viewed it as an act of colonialism and theft.
Mr Barnett on Friday denied this, arguing he could no longer spend taxpayers' money on the drawn-out negotiations.
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"No, it's not. It's a proper process," he told ABC Radio.
"It's a step that I've taken only after years, in my case, two years, of exhaustive negotiations where almost everything has been agreed except for getting to the point of a final consent agreement."
The lack of a negotiated settlement was "not through a lack of effort", and had already cost $16 million, he said.
"My preference continues to be an agreement by consent and I still believe that's probably what will happen," he said.
"It has just got to the stage now that with disputes, legal disputes, in the Aboriginal community that I cannot justify any more taxpayer funding going into this."
Compulsory acquisition for the $30 billion Woodside Petroleum-led project had been threatened for weeks.
