Western Australia's Resources Minister, John Bowler, announced that the area, about 600km southeast of Broome, would be put up for a competitive bid in the April 2007 acreage release.
Mr. Bowler said the lease of 24,000sq.km had been held by an overseas company for a number of years but due to the lack of development in the area, he had decided to cancel their permit.
"The previous permit holder has not been able to demonstrate the financial capacity necessary to fulfill its exploration commitments," the Minister said.
"The State Government has shown considerable tolerance in the past towards the promptness in fulfilling work programs but with increased interest in oil and gas exploration, this will change.
"Companies that do not perform cannot expect to retain their exploration acreage."
Mr. Bowler said exploration of the 530,000sq.km Canning Basin was at an all-time high.
"The high oil and gas prices have attracted petroleum companies to this under-explored part of Western Australia," he said.
"The Department of Industry and Resources has released areas periodically for acreage as exploration permits over the past few years.
"A potential explorer's only means of obtaining titles in the Canning Basin is through the competitive bid system when acreage is released or by farming in to existing titles," he said.
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