Mark Webber Challenge director Geoff Donohue said the decision was made because of a lack of sponsorship and the global economic crisis.

He said the decision was unrelated to the accident involving the Red Bull team driver in last year's challlenge.

The decision will cost Tasmania an estimated $9 million worth of media coverage.

Webber was seriously injured during the 2008 event in November when he collided with a four wheel drive vehicle in a mountain bike leg on the Tasman Peninsula.

There were fears that the lower leg injuries he suffered might hamper his Formula One career but he has been able to begin preparations for the 2009 season.

The Mark Webber Challenge has regularly attracted high profile national and international sporting and entertainiment identities.

A teams race, it includes running, kayaking and cycling through some of the more remoate parts of Tasmania over five days.

Tourism Minister Michelle O'Byrne said the State Government was disappointed with the decision to not proceed with the 2009 event.

"Tasmania has been a strong supporter of this event since its inception, committing three-quarters of a million dollars to building the event over the past three years.

"Even when this event was only a dream - unknown, untried and untested - the State Government saw the potential benefits to Tasmania through the profile of Mark Webber and the passion of those involved in this event."

Ms O'Byrne said the State Government, through Tourism Tasmania, had negotiated an increased level of involvement for the 2009 event and was committed to supporting the Challenge being held in Tasmania again this year.

"Undoubtedly, the Mark Webber Challenge has generated considerable media coverage and promotion of Tasmania, which is why the State Government was committed to continued support of the event."