Clutha-Southland MP Hamish Walker said the continued funding limbo for Telford was a further blow for staff and students.
''Uncertainty continues for Telford, with the Government's reform of vocational education raising more questions. This uncertainty is already costing it in the loss of [international] students.''
Walker blamed the situation on anticipated reforms to the tertiary vocational sector, which he claimed would ''strip power from regional New Zealand''.
Education Minister Chris Hipkins has proposed centralising polytechnics under a single nationwide organisation.
Clutha Mayor Bryan Cadogan, who also advocated strongly against Telford's closure, said he remained cautiously optimistic despite the recent revelations.
''As with any decision of this magnitude, there will always be a bit of nervousness getting closer to the announcement. The minister indicated the process would take the first half of the year and that is proving to be the case.''
He echoed Walker's concerns over reforms.
''... It would be counterproductive to dissolve identity and autonomy. People have dedicated their life endeavours to Telford, which will not be the case if it becomes part of a conglomerate.''
A ministry spokesman told the Otago Daily Times officials were negotiating with SIT about its future operations at Telford.
''SIT has submitted a business case requesting additional Crown funding to operate Telford in 2020 and 2021. This is currently under consideration by the minister.''
In order to allow SIT to plan ahead and recruit students, a decision would be made ''as soon as possible'', he said.