For the more than 1,000 veterans and their families who had travelled to Vietnam to mark 50 years since the Battle of Long Tan, news of the sudden cancellation has come as a shock.
Australia's Veterans Affairs Minister Dan Tehan has described the Vietnamese government's last-minute decision as a "kick in the guts."
"Can I say again how bitterly disappointed and how empathetic I am to all Australian veterans of the Vietnam War. This is a decision which, in my view, should not have occurred."
The Vietnamese government says it was concerned about what it called the "deep sensitivities" of the local community and the impact the commemoration would have on it.
Australian organisers had agreed to what they called a "low-key event," with no national anthems, flags, uniforms nor medals.
Mr Tehan says it is hard to understand why the decision has been made now despite 18 months spent working with the Vietnamese government to ensure the event ran smoothly.
"I think, given the short notice which has been given, I don't think this ... this is the way that you should treat a friend."
Vietnam Veterans Association of Australia national president Ken Foster has also expressed dismay at the decision.
"I'm disappointed, particularly, in the fact that the Australian forces were well-known during that war for the respect that we paid to the Vietnamese war dead. We never abused them. We always treated them with dignity. And, even at Long Tan, we were recognised as having paid due respects to their dead after the battle."
Ken Foster says he is concerned for the mental welfare of Australian Vietnam veterans hearing the news.
The Battle of Long Tan was the deadliest battle of the Vietnam War for Australia.
Seventeen Australians were killed in the battle in a rubber plantation near Long Tan, in 1966.
Another 25 were wounded, and one of them later died of his injuries, too.
At least 245 Viet Cong soldiers died in the battle.
Prime Minister Malcolm Turnbull says he is deeply disappointed by Vietnam's decision to block the commemoration now.
"Australia has been working closely with Vietnam for the past 18 months to prepare for this event. We had sought and received assurances from local authorities in Vietnam, as we have every year, that the Long Tan commemorations would proceed. Now we understand it is a matter for the government of Vietnam to decide what commemorations are held in its country. But this decision, and especially its timing, shows a disregard for those Australians who have, in good faith, travelled to Vietnam to participate in this week's events."
In a display of solidarity, Opposition Leader Bill Shorten has dismissed suggestions the Government could have done more to prevent the cancellation.
"I think, to be fair, the Government's been caught off guard by this, and I don't think anyone was expecting this."
It is understood an official party including the Australian and New Zealand ambassadors will lay a wreath and small groups will still have access to the site during the day.
