John Butterworth, chief executive officer of AIMIA, said the funding cut goes directly against the report's recommendations, which identified exporting Australian digital content as a "high priority".

Butterworth said it is both confounding and frustrating to receive mixed messages from the government.

He said the complete about-face has occurred over a five-month period.

"Austrade has made it clear that the decision has nothing to do with the exceptional performance of the AIMIA program or the digital content industry itself, so why do it?" Butterworth queried.

"New digital opportunities are constantly emerging with the rapid adoption of broadband, wireless and digital broadcasting technologies.