The Northern Territory government on Wednesday scrapped plans to build a new youth justice centre at Pinelands more than seven months after it was announced as an "ideal area".

Local businesses complained last year they had not been consulted and large public meetings were held where locals complained they did not want young offenders housed next to workplaces.

One of the key recommendations of the royal commission into the Protection and Detention of NT Children in November 2017 was to close the current Don Dale centre and build a new one.

The royal commission was ordered after the airing on ABC TV in 2016 of infamous footage of teenagers - including Aboriginal teen Dylan Voller in a restraint chair- being tear gassed.

NT Planning Minister Eva Lawler said she was responding to a Planning Commission report that found the Pinelands site was strongly opposed with potential impacts to industrial land, traffic and essential services.

However she also maintained it had been identified by her own department as an ideal site in relation to public transport and accessibility for visitors and staff and its proximity to allied health, psychological and other services.

"One of the difficulties of government is that a complex build such as a youth justice centre is one of those things that aren't welcome often in people's next-door communities," Ms Lawler told reporters.

Of 102 public submissions made after the announcement last August, 100 opposed building at Pinelands, Ms Lawler said.

Territory Families Minister Dale Wakefield ruled out staying long-term at the Don Dale site to save money and said the government would still spend the funds allocated to building new centres in Darwin and Alice Springs.

The NT government has committed $70 million for two new detention centres as part of $229.6 million to overhaul child protection and youth justice and implement the recommendations of the royal commission.

Lawyer and former president of the NT Criminal Lawyers Association John Lawrence said the backflip highlighted the government's "inability and incompetence" on the issue and says they should be in a centre managed by Aboriginal people.

"There would not be a jurisdiction anywhere in Australia or the common law world that would have kids in a condemned adult jail," he told reporters.

"We do and why, because they're Aboriginal."

The centre is a former adult prison and has housed juvenile detainees - which are usually mostly Indigenous - since 2014 when it was relocated from the now-defunct former youth justice centre next door.

CLP deputy opposition leader Lia Finocchiaro said the Labor government would never have selected Pinelands if had consulted with businesses and learned of the structural and safety concerns.

"In seven months, how much taxpayer's money did the government waste?", she said.

Australian Associated Press