Victorian Premier Daniel Andrews announced on Tuesday his government would no longer support the Games after updated estimates put the cost at more than $6 billion.

“Frankly, $6 billion to $7 billion for a 12-day sporting event, we are not doing that – that does not represent value for money, that is all costs and no benefit,” he said.

The Victorian budget outlined $2.6b would be spent preparing for the event, with Geelong, Bendigo, Ballarat, Shepparton and Gippsland among the five host centres.

Mr Andrews said the government considered moving the Games to Melbourne, holding fewer sports and having fewer regional hubs, but all options were too expensive.

“None of those options stack up, and we’re not going to be hosting the Games in 2026,” he said.

Treasurer Tim Pallas had been seeking a dollar-for-dollar contribution of $1.3 billion from the commonwealth but no money was set aside in the May federal budget.

Mr Andrews said even if the federal government did come to the party, the Games were not worth the money.

“I wouldn’t spend half of that money even if I got the other half from Canberra, because you know that’s coming at the expense of something else – hospitals, schools, roads,” he said.

Prime Minister Anthony Albanese said the decision was one for the Victorian government.

Meetings were held with Commonwealth Games leadership in London on Monday night Australian time.

The Commonwealth Games Federation said it received eight hours’ notice that the Games contract would be terminated and the government did not discuss solutions with it before reaching the decision.

It said the Victorian government had made the Games more expensive by including more sports and an additional regional hub, often against advice.

“The numbers quoted to us today of $6 billion are 50 per cent more than those advised to the organising committee board at its meeting in June,” the federation said.

The cost of breaking the Games contract is yet to be settled but Mr Andrews pledged it would be revealed at a later date.

While Victoria will no longer host the Games, some infrastructure projects will still go ahead.

There will be $1b spent on more than 1300 new social and affordable housing homes across regional Victoria and $150 million on tourism and events

Planned upgrades to regional sporting facilities are also set to go ahead.

About 100 people based in Geelong were employed to co-ordinate the Games, with some expected to lose their jobs and others redistributed to other government roles.

Regional Victoria became the only bidder for the Games after Durban in South Africa lost the 2022 event and the original 2026 host city Birmingham stepped in for last year’s competition.

Victorian Opposition Leader John Pesutto and Nationals Leader Peter Walsh branded the scrapping a “massive humiliation” for the state.

“The cancellation of the Commonwealth Games is hugely damaging to Victoria’s reputation as a global events leader,” they said in a joint statement.

Ballarat Mayor Des Hudson said the decision came as a surprise but he was confident the promised legacy benefits from the cancelled Games would still flow from the $2b package.