Proposals to have thousands of cows housed in cubicles - facilities which critics have labelled as factory farming - have been ditched.

Three firms - Williamson Holdings, Southdown Holdings and Five Rivers - have withdrawn their plans to set up mass-scale cubicle stables in the South Island's MacKenzie Country.

Applications to discharge effluent into MacKenzie Basin have also been withdrawn, with the companies citing the large costs of having the applications looked at by the Ministry for the Environment.

Southdown Holdings director Richard Peacocke said the premature consideration of effluent consents - before a decision had even been made about gaining access to water - also added to the companies' withdrawal.

"We set about developing a world-class proposal to minimise and mitigate any potential negative environmental effects of dairy farming.

"The irony of our situation is that stable-style farming is the way of the future if New Zealand is committed to environmentally sustainable farming."

The companies had wanted to set up cubicle stables for up to 18,000 cows.

In a table outlining "points of correction: public misinformation campaign", Mr Peacocke said the idea that the cubicle-stable approach would damage the environment was a myth.

"Stables have less impact than traditional dairy farming - particularly on ground water and waterways."

Mr Peacocke confirmed the firms were no longer interested in cubicle farming.