Walhalla’s Vinter Ljusfest will likely return next year according to Baw Baw Shire councillor Michael Leaney who says the event this year "fell over due to being starved of resources".
Mr Leaney said the festival had been identified by the shire as an important event for the region and needed to be "revitalised and reinstated".
However, he said the event would not go ahead this year due to a lack of funding.
In previous years the festival has attracted thousands of people to the town in winter – lit at night with interactive and unusual light displays.
"You can't put on a world class event with no funding, with no support and no back up basically," Mr Leaney, who owns Walhalla's Star Hotel, said.
"The community, a small group of people within Walhalla, were driven into the ground trying to make things work with virtually nothing."
The event was put on the backburner in 2016 due to a lack of funding, however, returned last year when Visit Victoria and Baw Baw Shire chipped in a combined total of $25,000 for the project.
Mr Leaney said the event would not proceed this year after it was "starved of resources" but he was hopeful it could return next year through the support of Destination Gippsland.
"To be fair there are businesses who love the money coming through the door when the event is on but have the expectations that somebody else will do all the work for them," Mr Leaney said.
"I was a very keen driver for the ljusfest but being on council I have very limited ability to have a direct involvement and people forgot to do a funding application ... takes hours of input, time and a lot of thought."
He said a key outcome recently identified in the council's Destination Action Plan was to improve tourism industry professionalism so operators had skills to undertake tasks like applying for funding for tourism events.
Walhalla and Mountain Rivers Tourism Association president Russell Wright said the event – which attracts "a couple of thousand easily over the month" – would hopefully return next year.
"We've had significant interest in the event this year and unfortunately it's been a disappointment to many to hear the event won't be on," Mr Wright said.
"We're hoping for a 2019 return and from there on a bi-yearly event just to allow us time for planning and funding ... and to give the people who put on the event time to get themselves together."
Despite the Vinter Ljusfest being postponed, Walhalla Goldfields Railway will still run an event similar to last year on Saturday nights this month.