Griffith will miss out on 60 new jobs as TAFE NSW moves a shared services centre to Tamworth instead.
TAFE NSW blamed a lack of housing and services for the change but Member for Murray Helen Dalton said the decision "reeked of politics".
"This was a major election promise from the NSW Nationals, announced in March 2019, that is now broken," Mrs Dalton said
The service centre was proposed to be operating by 2021.
A spokeswoman for TAFE NSW said analysis of the move showed that its Shared Service Centre "would be best located in Tamworth".
"TAFE NSW determined there may be issues securing the appropriate workforce in Griffith, which would be a risk to the viability of the centre," the spokeswoman said.
"Locating the facility in Griffith would also have an impact on the region's housing, services, and infrastructure."
Then NSW skills minister Adam Marshall travelled to Griffith in 2019 to announce the proposed de-centralisation which would bring new jobs.
"At the end of the day, 60 new jobs in Sydney is not a big deal, but being from a regional area myself I understand how this will make a hugely positive impact here in Griffith," Mr Marshall told The Area News in March 2019.
Mrs Dalton said it appeared to a decision based on politics.
"The NSW Government promised 60 new jobs for our town," she said.
"Before the election, they said Griffith was the perfect location.
"Now, the centre is going to the NSW Nationals seat of Tamworth. It seems as if the government are punishing people for not voting for the National Party.
"The NSW Government has kicked us in the guts at a time the town really needs an injection of funds."
Griffith City Council mayor John Dal Broi said the decision was "disappointing".
"Council will be making representation at a ministerial level seeking this decision to be reversed," Councillor Dal Broi said.
Council's general manager Brett Stonestreet said council had not been informed as to why they the service centre would no longer be located in the city.
"We have requested specific reasons as to why the minister's commitment has been overturned," Mr Stonestreet said.
"We are yet to receive a response in that regard."
TAFE NSW's spokeswoman said they would continue to invest in Griffith to provide access to training for the jobs of today and the future.
"TAFE NSW is committed to delivering high-quality training to ensure the ongoing prosperity of Griffith and the local community," she said.
"It is working to provide new and innovative agricultural training covering digital technologies and production analytics to help the agricultural industry increase its productivity and profitability.
"Griffith campus will benefit from part of a $20 million investment announced during the 2020/21 NSW budget for new digitally enabled classrooms, a new interactive learning area, and a learning space to support the academic and cultural needs of indigenous students."