Victoria Premier John Brumby insists Melbourne is not interested in hosting a Formula 1 race without the top teams.
Australia's F1 chief Ron Walker already said on Thursday that the country would not want to have a grand prix without teams like Ferrari if the top names leave the sport to create their own championship.
Brumby backed Walker's views, saying the city will not pay for "half an event".
"I want value for money for Victorian taxpayers and that means that you want all of the competitors, you want all of the race teams," Brumby told the Sydney Morning Herald.
"We won't be paying for half an event, simple as that. So I hope that they can resolve this, I'm sure that they can. I think it's very early days."
Opposition leader Ted Baillieu, however, urged the government to do everything possible to keep the race in Melbourne, even if it meant hosting a race without the top teams.
"The Victorian government must now have a contingency plan in order to keep the grand prix here in Victoria in the future" he said.
"If we lose the grand prix it'll be gone forever."