iiNet was one of two large residential internet providers to be left out of the much-publicised trials, which are about to kick off.
Telstra had in December 2008 ruled out participation in the trial.
It was speculated at the time that iiNet's exclusion was in part due to their vocal opposition to the scheme.
It's a position that hasn't changed a great deal, iiNet Managing Director Michael Malone said the ISP "only agreed to participate in the trial to demonstrate that the policy was fundamentally flawed, a waste of taxpayers' money and would not work."
Now it has emerged that "drawn-out negotiations" between iiNet and the Department of Broadband, Communications and the Digital Economy (DBCDE) have broken down completely.
It is unclear whether iiNet had been offered a place in the second round of trials and, if so, under what conditions.
Both DBCDE and iiNet could not be reached by iTnews at the time of publication.
In a statement released to the press, Malone cited constant changes in the policy, confused explanations of the purpose of the trial and recent revelations regarding the "blacklist" as "clear indications" that the trial - and iiNet's participation in it - is unnecessary.
"It became increasingly clear that the trial was not simply about restricting child pornography or other such illegal material, but a much wider range of issues including what the Government simply describes as "unwanted material" without an explanation of what that includes," Malone said.
"Everyone is repulsed by, and opposed to, child pornography but this trial and policy is not the solution or even about that.
"In reality, the vast majority of online child pornography activity does not appear on public websites but is distributed over peer-to-peer networks which are not and cannot be captured by this trial or policy."
Malone said the Government should re-think its approach "and urgently needs to make clear what its intentions are in respect of internet censorship".
"This lack of communication from government and bureaucracy is rightly seen as underhand and unsavoury and is now attracting international dismay as well as Australian disgust," Malone said.