After six years of waiting, Mt Tomah is no longer in line for a new mobile phone tower after the NSW and federal governments gave approval for the project to be moved to Gollan, near Dubbo.
Federal Member for Macquarie, Susan Templeman, said the development also casts doubt on planned towers at Yellow Rock and the Megalong Valley.
She slammed the move and said it highlights the failure of the Morrison government's mobile blackspot funding program to solve problems in the Blue Mountains and Hawkesbury.
"After years of delays, I was advised of problems with the construction of the mobile blackspot phone tower for Mt Tomah in September 2018 by Telstra and wrote to the minister. As a result I worked with the minister and Telstra to identify some alternative locations and linked them with Blue Mountains City Council to ensure that all relevant parties were communicating with each other on the matter," she said.
"In March 2019 Telstra identified three alternative sites at Mt Tomah they said they would consider. Today they say these sites have been 'deemed unsuitable to progress'.
"I have now learned from Telstra that the decision by the Morrison government to strip mobile blackspot funding away from the electorate of Macquarie was actually made earlier this year, after the NSW government approved a replacement site in June 2018 in the neighbouring Calare electorate, held by the National Party."
Ms Templeman demanded the Morrison government "reinstates the funding for Mount Tomah and guarantees that the remaining sites go ahead".
Blue Mountains mayor Mark Greenhill also called on the federal government to reverse the decision on the Mount Tomah tower.
"We have been committed to working with the government to find the right location. I repeat that commitment now and ask them to reverse this decision and work with our community to get this in place immediately."
But a spokersperson for the Department of Communication and the Arts said Telstra investigated a total of nine locations to build a base station at Mount Tomah, and was unable to obtain landowner agreement at a suitable site that would provide sufficient coverage.
"The replacement site at Gollan in NSW was proposed by Telstra, not the federal government," they said.
"This decision was endorsed by the NSW government. The federal government agreed to fund Gollan as a replacement site to maximise the benefits of the tower by providing improved coverage to as many regional communities as possible."
Ms Templeman said there are also significant problems with the rollout of the Megalong Valley and Yellow Rock towers, with serious concerns that those projects will not proceed.
The department spokesperson confirmed Telstra has experienced delays with the power authority at Megalong Valley in getting power connected to the site, and has reported ongoing delays in obtaining landowner consent at a suitable site at Yellow Rock.
Federal Regional Services Minister Mark Coulton said the government was committed to getting rid of more mobile black spots.
"More phone towers means people will be able to make Triple 0 calls in more locations, stay connected with their families, and make it easier for people to do business."