The Abbott government's plan to reintroduce regular fuel tax increases looks likely to stall after the Greens withdrew support for the measure.
Greens leader Christine Milne previously indicated the party was open to restoring the half-yearly fuel excise rises, on the proviso the money would go towards public transport.
The move would have added about 60 cents to the cost of a tank of petrol from August 1.
The Greens party room examined the draft legislation on Tuesday and decided not to support the proposal as it stands.
The party is upset that the government has said revenue raised by the increase would be put solely towards building more roads, which would increase congestion and pollution.
Senator Milne said the Abbott government is refusing to budge.
"It's up to the prime minister: he has said he's talking to people, but he's not," she told reporters.
There was no public transport package or fuel efficiency standards attached to the measure.
The Greens did not want $45 billion plunged into roads by 2030.
"Why would we want to put more money in the Abbott government's pockets to roll out more freeways?" she said.
Price signals should be used for transforming peoples' behaviour, not as a pure money grabbing exercise, she said.
Senator Milne reportedly had been pushing for a further condition for Greens support - ensuring that miners and loggers were not rebated the excise increase.
She denied she had been rolled by her colleagues in the party room and would not confirm whether the decision was unanimous.
Deputy Greens leader Adam Bandt and Senator Peter Whish-Wilson were reportedly concerned about adding to cost-of-living pressures.
Labor also opposes the tax hike because it is a broken election promise and the Palmer United Party has indicated it will vote to block the rise.
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